Posted on 05/22/2012 5:59:24 AM PDT by tired&retired
And now comes some news about the Facebook IPO that buyers deserve to be outraged about. Reuters Alistair Barr is reporting that Facebook's lead underwriters, Morgan Stanley, JP Morgan, and Goldman Sachs, all cut their earnings forecasts for the company in the middle of the IPO roadshow. This by itself is highly unusual (I've never seen it during 20 years in and around the tech IPO business).
Read more: http://www.businessinsider.com/facebook-bankers-earnings-forecasts-2012-5#ixzz1vbRXNlwU
(Excerpt) Read more at businessinsider.com ...
More.... “In other words, during the marketing of the Facebook IPO, investors who did not hear about these underwriter estimate cuts were placed at a meaningful and unfair information disadvantage. They did not know what a lot of other investors knew, and they suffered for it.
Selective dissemination of this sort could be a direct violation of securities laws. Irrespective of its legality, it is also grossly unfair. The SEC should investigate this immediately.
We first heard rumblings about this last week, and we were so startled that we assumed the reports were wrong. Then, over the weekend, when Reuters reported the basic story again, we said that if it was true, Facebook IPO buyers deserved to be “mad as hell” about it. And now Reuters has the details, and they sound as bad as we had feared.
There are a couple of possibilities for what happened.
The first one is bad news for Morgan Stanley and the other lead underwriters on the deal.
The second is also bad news for Facebook.
According to Reuters, the underwriter analysts cut their estimates after Facebook issued an amended IPO prospectus in which the company mentioned, vaguely, that recent trends in which users were growing faster than revenue had continued into the second quarter.”
Morgan Stanley Was A Control-Freak On Facebook IPO — And It May Have Royally Screwed Itself
Read more: http://www.businessinsider.com/tag:reuters.com,0000:newsml_L1E8GIER0#ixzz1vbSw57li
I don’t get the Facebook concept, and I sure didn’t get the hype behind the offering.
I’m just a boring utility investor.
Just more fodder for the Socialist argument that “Capitalism is a rigged casino game”.
Sooner or later, by playing things too cute, guys like this are going to elect the American Hitler or Stalin.
More and more it seems that the purpose of banks, stocks, and investments is to steal from you and be legal in doing so.
The purpose was to transfer $$$$$$$$$$$$$$$$$$$$$$$$$
from Main St. and taxpayers to the bankers and DNC.
Mission accomplished.
I’d bet $10 per share at year end.
I’d bet $.10 per share at year end.
I added the decimal point you missed! LOL
Wall Street IS part of the statist game. Its not “free market capitalism” - that’s for sure.
We are stuck with Wall Street in its present form as long as we have the Federal Reserve in its present form.
I’d take a chance and buy 100 shares if it went down to $10. I do think the IPO was botched but I wouldn’t discount the value moving up again in the near future. If you have any type of home business, where else can you post your wares for free? For now anyway....
Yet another reason why I have never participated in any IPO that was NOT underwritten by Goldman Sachs. Love them or hate them, but they know how to do it right, as they did (big time) with China’s Baidu (BIDU) in 2008. Morgan is just pathetic.
If you accept the underwriter estimates uncritically, you’re not much of an investor. Everyone can see it is in the interest of the underwriter to pump up the stock. Anyone taking a substantial position should work out his own estimates.
It was much better when Wall Street compamies were partnerships, and committed their own capital. You are much more careful with your own money.
"But, just as important, news of the estimate cut was passed on only to a handful of big investor clients, not everyone else who was considering an investment in Facebook."
The wonders never cease.
True, and , interestingly, engineered by the leftist sleazebag Zuckerberg, and the "stimulus" insider Morgan Stanley.
Sooner or later, by playing things too cute, guys like this are going to elect the American Hitler or Stalin.
And Severin leaving the US makes even more sense.
Link goes to “Whoooops! Page you are trying to locate cannot be found! Not surprising!
I read an analysis of it yesterday. If Facebook was valued the same as Google, Apple, and other Tech darlings...
It would be between $6 and $7 per share.
Overblown. Overhyped. But Mark Whatshisface will make a few billion off of it. Can't fault him for that.
I look forward to the day when anti-virus programs treat Facebook like the virus it is.
I guess that depends on who committed fraud and when. Like we will ever find out.
Just like the tech bubble. Think about what Facebook does and how it generates revenue. That should give you an idea of its ‘growth’ potential.
Like most tech companies, the value of Facebook is driven by people’s imagination. Very little behind it. Most people already believe it is a fad.
The web is far to volatile to value anything out 10 years. The pe ratio system completely is completely FUBAR in this case
This is the kind of thing in combination with guilt by association that makes republicans a hard sell. I am very pro-free market, but until some of these bastards are hung in the streets the sheeple will continue to push for socialism (which incidently only empowers scumbags even more). This is a serious problem that the republican party needs to come up with a solution for. Other than Ron Paul the rest of them just sound like [insert bank name] board members. And Ron Paul would get us all killed, so there has to be another option!
Exactly.
It's a fake scandal.
These analysts who make these future estimates are not allowed to receive information that is not in the prospectus.
That's why the prospectus is so damn long, too long for a lot of investors to bother reading.
So if an "analyst" raises or lowers his guess for future earnings, why is that a scandal? These guys are wrong more often than they are right.
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