Renren (RENN) shares are up again Friday morning by about 5%.
The catalyst for the move appears to be an announcement overnight that the company is partnering with Youku (YOKU) in video.
Renren used to be known as the "Facebook (FB) of China." However, the last couple of years have been tough on the company. As the world has moved to mobile from desktop, its social-networking audience hasn't followed, and Renren's nascent attempts have faltered at selling advertising to its young users.
Still, with a lot of money in its pockets, Renren has set about growing new businesses that stand to win in the mobile age. Its primary focus has become mobile games, but it's also made investments in group-buying and in video.
For instance, about 18 months ago Renren bought the Chinese video website 56.com, and it's been trying to grow that business as much as it can. 56.com focuses purely on user-generated content, as opposed to a name like Youku, which is the market leader and focuses on premium content in the form of dramatic series.
Renren has tried to beef up 56.com by encouraging the remaining users on its social networking site to share videos with their friends. The company claims these efforts have been successful, and that the business is growing modestly and not losing money.
Now the company has a deal with Youku for cross-promotion. Renren investors are likely hoping that this partnership is a first step in potentially off-loading 56.com to Youku, which would enable Renren to focus more on its mobile-gaming business.
The company says its group-buying business -- called Nuomi -- is the No. 3 group-buying site in China. On the last earnings call, management said the business would emerge as one of the last men standing in this group-buying business in China, and that the company was investing in new cities and salespeople in an effort to sell those deals.
At the same time, rumors have recently circulated that Renren is close to a deal to unload this property as well.
It would be smart for Renren to double down on mobile gaming. The company has been trying to develop more homegrown games here, and to sell those games to customers that use Google's (GOOG) Android, in addition to their Apple (AAPL) iOS customers.
This focus would be rewarded by investors who still see a company whose market capitalization is made up mostly of its cash balance. If Renren can continue to grow its mobile business, all that incremental value should get directly reflected in the share price.