A week ago, management of Renren, the Chinese social networking site, and its bankers must have breathed a sigh of relief. Despite many questions over the company’s valuation, Renren had priced its initial public offering at the top of the range, and its shares jumped close to 30 per cent on the first day of trading.

But the party is over. As of midday in New York on Wednesday, Renren had dropped back to $13.56 per American depositary share, below its IPO price of $14. To those warning of a Chinese internet bubble, this performance is a sign that it may be about to burst.

Since late last year, Chinese internet companies have been racing to go public in the US. Kicked off by Youku, the internet video site, and Dangdang, the online retailer, companies operating in the world’s most populous internet market were trying to get rich valuation multiples.