General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsOf $16B FACEBOOK shares sold to new investors, $11.76B were purchased by the underwriters!!!
Looks like Morgan Stanley, Goldman Sachs and JP Morgan are going to lose a lot of money on Monday, unless they can somehow keep manipulating the market until millions of suckers fall for the hype and start buying.
Facebook IPO fight-back begins: share price 'implausible', says analyst
....Company filings after the market closed on Friday night however revealed the extent to which the banks who led Facebooks initial public offering - in which $16bn of shares were sold to new investors - were forced to move in to the market and buy shares in order to keep the price above the $38 level. Morgan Stanley, Facebooks lead financial adviser, ended the day with 162m shares, worth $6.16bn. Other banks including JP Morgan and Goldman Sachs also bought shares, ending the day with $3.2bn and $2.4bn holdings respectively.....
http://www.telegraph.co.uk/technology/facebook/9276699/Facebook-IPO-fight-back-begins-share-price-implausible-says-analyst.html
Zalatix
(8,994 posts)would it be wiser to short Facebook, given this level of risk?
exboyfil
(17,865 posts)and actively managed mutual funds. There higher ups also play golf with the higher ups of the big pension funds and other publicly invested funds.
I have said before I think they will lay a lot of this paper out on those organizations.
monmouth
(21,078 posts)leftyohiolib
(5,917 posts)PSPS
(13,628 posts)Whenever there's an IPO, the underwriters put in buy orders for the initial offering price to make sure it won't fall below it. This is done solely for promotional purposes because it would be a disaster if an IPO ended up trading below the initial price.
The fact that Facebook ended the day at about the initial price (up 0.6%) means it was a flop. But it isn't surprising. The company makes nothing, and even the initial price is a P/E of about 100, which is ridiculous. I also noticed the media really pushing the "pump & dump" script like Louis Rukeyser used to do. "Now is a great time to buy Facebook," says the columnist who just bought a bunch of shares he wants to sell for a profit.
The underwriters made a bundle, though -- almost $200 million for a day's work.
Prometheus Bound
(3,489 posts)I mean, they stand to lose 10 times or more what they made in fees.
bhikkhu
(10,725 posts)one way or another it probably is a gamble for them, as is any IPO, but there are ways to mitigate risk that can be worked out in advance and written into the contract. There's plenty of cash at play on the fat end of things, and I wouldn't be surprised if some of that isn't guaranteed as protection for the underwriters, who were probably bound to support the price of the offering.
underpants
(182,989 posts)They have no business model and are at their peak - at best