Suckers Game: Facebook (FB) Underwriters Slashed Estimates While Raising IPO Price
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A botched listing, a lofty valuation and now word that the underwriter was cutting estimates while they were boosting the IPO price and size. It is no wonder that Facebook (Nasdaq: FB) is down over 13 percent from its IPO price and leaving retail investors feeling the pain.
Today is it was reveled that in a rare move analysts at lead underwriter Morgan Stanley (NYSE: MS) were cutting revenues numbers ahead of the deal. The lower numbers followed the May 9 SEC filing.
"This was done during the roadshow - I've never seen that before in 10 years," said a source at a mutual fund firm cited by Reuters.
Other underwrites including JPMorgan Chase and Goldman Sachs also revised estimates.
Although Reuters could not confirm the official number cut it was said that Morgan Stanley's Internet analyst, Scott Devitt, cut his revenue estimate for the second quarter and also cut his full year 2012 revenue forecast.
Despite the lower numbers, which came mid-roadshow, Morgan Stanley lifted the estimated price of the IPO from the original $28-$35 to $34-$38 and finally priced it at $38. In addition, the offering size was lifted from 337,415,352 shares to 421,233,615 shares.
Today, shares of Facebook broke below the $33 level - currently trading at $32.91.
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Today is it was reveled that in a rare move analysts at lead underwriter Morgan Stanley (NYSE: MS) were cutting revenues numbers ahead of the deal. The lower numbers followed the May 9 SEC filing.
"This was done during the roadshow - I've never seen that before in 10 years," said a source at a mutual fund firm cited by Reuters.
Other underwrites including JPMorgan Chase and Goldman Sachs also revised estimates.
Although Reuters could not confirm the official number cut it was said that Morgan Stanley's Internet analyst, Scott Devitt, cut his revenue estimate for the second quarter and also cut his full year 2012 revenue forecast.
Despite the lower numbers, which came mid-roadshow, Morgan Stanley lifted the estimated price of the IPO from the original $28-$35 to $34-$38 and finally priced it at $38. In addition, the offering size was lifted from 337,415,352 shares to 421,233,615 shares.
Today, shares of Facebook broke below the $33 level - currently trading at $32.91.
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