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Economy
In reply to the discussion: STOCK MARKET WATCH -- Tuesday, 22 May 2012 [View all]Demeter
(85,373 posts)56. Facebook 11% Drop Means Morgan Stanley Gets Blame
http://www.bloomberg.com/news/2012-05-22/facebook-11-drop-means-morgan-stanley-gets-blame-for-flop-tech.html
Let the Facebook Inc. (FB) finger-pointing begin.
After one of the most anticipated initial public offerings in history, Facebooks 11 percent drop yesterday prompted investors to fault everything from Morgan Stanleys role as lead underwriter, to the companys greed and the Nasdaq Stock Market.
It was like the gang that couldnt shoot straight, said Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust in Boston. He said he placed Facebook orders for clients. The underwriters mis- estimated what actual demand was, and there was pure execution failure coming out of the Nasdaq.
Taking the most heat is Morgan Stanley, said Mullaney. The bank was lead underwriter among the 33 firms Facebook hired to manage the $16 billion sale of stock. The bank decided with Facebook executives to boost the size and price days before the May 17 IPO, ignoring advice from some co-managers, said people with knowledge of the matter, who declined to be identified because the process was private. Morgan Stanley (MS) talked with few of its fellow underwriters aside from JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) throughout the IPO, one person said.
They overplayed the enthusiasm and probably just misread the atmosphere of the marketplace, said Keith Wirtz, who oversees $15 billion as chief investment officer at Fifth Third Asset Management in Cincinnati and bought some stock in the IPO. Facebook increased the number of shares being sold in the IPO by 25 percent last week to 421.2 million and raised its asking price to a range of $34 to $38 from $28 to $35. Had Facebook kept the original terms, investors may have had a better shot at a first-day pop. Instead, the stock was little changed in its debut because Morgan Stanley intervened to prevent it from falling below the IPO price. The shares closed at $34.03 yesterday...
MORE WAILING AND GNASHING OF TEETH AT LINK
Let the Facebook Inc. (FB) finger-pointing begin.
After one of the most anticipated initial public offerings in history, Facebooks 11 percent drop yesterday prompted investors to fault everything from Morgan Stanleys role as lead underwriter, to the companys greed and the Nasdaq Stock Market.
It was like the gang that couldnt shoot straight, said Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust in Boston. He said he placed Facebook orders for clients. The underwriters mis- estimated what actual demand was, and there was pure execution failure coming out of the Nasdaq.
Taking the most heat is Morgan Stanley, said Mullaney. The bank was lead underwriter among the 33 firms Facebook hired to manage the $16 billion sale of stock. The bank decided with Facebook executives to boost the size and price days before the May 17 IPO, ignoring advice from some co-managers, said people with knowledge of the matter, who declined to be identified because the process was private. Morgan Stanley (MS) talked with few of its fellow underwriters aside from JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS) throughout the IPO, one person said.
They overplayed the enthusiasm and probably just misread the atmosphere of the marketplace, said Keith Wirtz, who oversees $15 billion as chief investment officer at Fifth Third Asset Management in Cincinnati and bought some stock in the IPO. Facebook increased the number of shares being sold in the IPO by 25 percent last week to 421.2 million and raised its asking price to a range of $34 to $38 from $28 to $35. Had Facebook kept the original terms, investors may have had a better shot at a first-day pop. Instead, the stock was little changed in its debut because Morgan Stanley intervened to prevent it from falling below the IPO price. The shares closed at $34.03 yesterday...
MORE WAILING AND GNASHING OF TEETH AT LINK
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