"Facebook’s stock slides in 2d day of trading" by Barbara Ortutay and Pallavi Gogoi | Associated Press, May 22, 2012
NEW YORK — Facebook was supposed to soar. Instead, it plunged.
After the social network’s stock fizzled Friday in its long-awaited debut, its stock fell 11 percent Monday, even as the rest of the stock market rallied.
The downward spiral has left some people sitting on big losses, and others scratching their heads. After all, nothing fundamental has changed at Facebook in the last week since the much-hyped company came to the stock market — Facebook still has more than 900 million users, its 28-year-old founder Mark Zuckerberg controls the company, and it is still one of the few profitable Internet companies to go public.
Facebook’s IPO — like Netscape’s in 1995 and Google’s in 2004 — was billed as a milestone moment. Facebook was supposed to offer proof that social media is a viable business and more than a passing fad.
But investors don’t seem convinced. Facebook’s stock closed Monday at $34.03, down 11 percent from Friday’s closing price of $38.23. The investment banks that arranged Facebook’s offering set a price of $38 on Thursday. Although many investors had hoped for a big first-day pop, Facebook’s stock opened Friday at $42.05 and fluctuated between $45 and $38 throughout the day.
Some people may wonder why Facebook’s stock didn’t do worse. The answer is: Facebook had some help. On Friday, Facebook only got as low as mere pennies above the offering price of $38 per share but never fell below. The banks that underwrote the IPO, like Morgan Stanley and others, put in enough ‘‘buy’’ orders at $38 to keep the price from dropping below that level.
Oh, so it was a RIG JOB, 'eh?
And how come JPMorgan Chase and Goldman Sachs don't merit a mention?
It’s a customary gesture from underwriters to support the company they helped bring to market, explained Jay Ritter, a finance professor at the University of Florida.
That smells like bullshit to me.
It’s a way to save face and show that the company and the bankers gauged an appropriate level of demand from investors and valued the company correctly.
A customary gesture? Then the stock markets are more of a fraud than I thought.
Yeah, the bankers really saw clearly on this one, huh?
Any wonder why I don't want to read this shit paper anymore?
Pulling off a successful IPO means properly gauging supply and demand. The investment banks arranging the transaction, the deal’s underwriters, work with the company to decide how much stock to sell and at what price. Facebook sold 421 million shares. That was a lot of stock to sell. It is one of the largest IPOs on record.
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"Mass. investigating Facebook IPO" by Beth Healy | Globe Staff May 23, 2012
Massachusetts Secretary of State William F. Galvin is investigating whether one of the investment bankers for Facebook Inc., Morgan Stanley, may have shared advanced information about the social media company with certain investors.
It's called insider trading and it is supposed to be illegal.
Galvin said his Securities Division is looking into conversations a Morgan Stanley analyst had with institutional investors about Facebook’s revenue prospects before its initial public offering last week.
Morgan Stanley, lead underwriter for the $16 billion IPO, was already
facing an inquiry by the Financial Industry Regulatory Authority over
allegations of sharing negative information with some investors ahead of
the IPO.
In a statement Morgan Stanley said it “followed the same procedures for the Facebook offering that it follows for all IPOs.’’
Uh-huh.
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Related: Facebook IPO scrutiny grows
"As Facebook shares rise, investors sue over IPO" by Don Jeffrey | Bloomberg News, May 23, 2012
May 23 (Bloomberg) -- Morgan Stanley, Goldman Sachs Group Inc., JPMorgan Chase & Co., and other underwriters along with Facebook Inc. were sued by investors who claimed they were misled in the purchase of the social network firm’s stock....
Also sued were units of Bank of America Corp. and Barclays Plc, as well as Facebook Chief Executive Officer Mark Zuckerberg and Chief Financial Officer David Ebersman....
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"Facebook’s fumbled IPO draws lawyers, regulators; Flurry of lawsuits, regulatory scrutiny test" by Beth Healy | Globe Staff, May 24, 2012
The uproar over the handling of Facebook Inc.’s stock launch grew louder Wednesday as lawyers representing investors sued Morgan Stanley and other major Wall Street firms involved in the deal, as well as the Nasdaq Stock Market and Facebook executives....
A class-action lawsuit filed in New York on Wednesday names Morgan Stanley as well as Facebook’s top executives and other large stock underwriters, including Goldman Sachs & Co. It alleges that only some investors learned of the dimmer take on Facebook’s prospects ahead of the IPO....
People in the securities business say it is highly unusual for an underwriter of a stock offering to lower its estimates while running an IPO.
Are you sure it isn't a customary gesture?
“I’ve never heard of anybody cutting numbers in the middle of a roadshow,’’ said David Donovan, a former top trader at Fidelity Investments who is now an industry consultant.
Anna Ward, a recent Boston University graduate who received 100 shares of Facebook as a commencement gift, said the drop in the stock was disappointing, not least because this is her first time owning stock. But she expects the shares to rebound over time.
It's the thought that counts.
“I’m of the generation that grew up with Facebook, so the stock is symbolic,’’ she said. “I’m going to hang onto my shares for the long term.”
After slumping more than 18 percent since the Facebook IPO, the shares rose 3 percent, to $32, on Wednesday.
Separately, regulators were looking into technology issues at Nasdaq that led to problems with the Facebook IPO. Trading started a half hour later than expected, and there were delays throughout the day. The stock market was the subject of an investor lawsuit filed Tuesday in federal court in New York over its handling of the stock’s opening day of trading....
Nasdaq’s chief executive this week blamed software problems for the trading glitches....
PFFFFFT!
What a weak, lame-ass excuse for a swindle!
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Related: Frenzy over Facebook IPO costs small investors more than $600m
Also see: Facebook executive talks careers to Harvard Business School grads
Facebook's priceless offering
Facebook highlights organ donor status
I'm sorry, but every time I read about organ donors in the agenda-pushing paper all I can think of is the Israeli organ-harvesting ring.
Next Day Update:
“Facebook got the last laugh. They made a killing for the insiders, and then the little guys kind of suffered.”-- Christopher R. Khan, vice president of the Boston College Investment Club and an economics major who will be a senior next year.
Yeah, how funny, ha-ha.
