The Wall Street Journal reported that RenRen’s (NYSE:RENN) shares spiked more than 50% on the NYSE over the past two days, piggy backing off the monstrous valuation set for Facebook’s prospective IPO. It last closed at US$5.55, bringing its market cap to US$2.18 billion.

RenRen is of course China’s Facebook. I’ve heard stories where, the first version of Facebook even took the source code that said “A Mark Zuckerberg Production”. Nothing is off limits in China.

Facebook has been the most hotly anticipated internet IPO since Google in 2004. Its valuation, rumoured to be in the US$75-$100bn range has created frenzy, with reports of early employees and investors set to make large windfall gains, such as wealth advisor Devish Makan. Such frenzy has lead investors to believe that if RenRen is China’s Facebook and China is sitting on top of a very large and growing internet user base, RenRen must be gold.

However it is not an equal comparison. Facebook is already profitable, by selling targeted advertising. Between 2009 to 2011, Facebook experienced strong revenue growth of 127%; $3.8 billion in revenues with an operating profit of $1.5 billion. RenRen has not broken even yet and is battling a tough and crowded social networking market. It seems more and more of RenRen’s young users are shifting to newer forms of social sharing apps. Sina Weibo, a Twitter like micro-blog and Tencent Weixin are fast becoming the networks of choice. To put it in context, although RenRen is much older, it has much less users than the others. RenRen has 137 million users, Sina Weibo has 250 million users and Weixin is rumoured to have amassed 200 million users. The caveat to all these numbers is that it is difficult to tell how many users are real or fake.

The point is, as WSJ put it, for “investors planning to friend Renren should consider whether the Chinese clone really has the same promise as the U.S. original.” It may look the same but it is not operating in the same market environment.