Morgan Stanley (MS) Lowered Its Facebook (FB) Outlook Ahead of the IPO
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Rating Summary:
46 Buy, 17 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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The secret behind Facebook's (Nasdaq: FB) lackluster IPO is finally revealed! And it's a little disturbing and fitting to boot!
According to Reuters, lead underwriter on the offering Morgan Stanley (NYSE: MS) cut its outlook on Facebook in a note to its biggest clients ahead of the debut last Friday.
Specifically, Morgan Stanley's note offered lower revenue expectations following an amended S-1 filing with the U.S. SEC. The adjustment was made following disclosure by Facebook that more users were accessing the social media site via mobile devices, a less lucrative method in term of drawing ad revenue. The disclosure left Morgan Stanley with the responsibility to reduce growth expectations until the mobile ad model for Facebook becomes more polished.
Not to say Morgan Stanley didn't want to pump-up the IPO as much as anyone, but investment bank analysts operate differently than the bankers and salesmen of an underwritten IPO. Logically, Morgan Stanley's analyst branch had a duty to provide clients with the best, most up-to-date information available.
Facebook flopped 11 percent Monday following a wishy-washy open last Friday. The stock down more than 6 percent Tuesday. Should Facebook have been anything other than Facebook, shares might've plunged on the very first day of trading, bringing down billions upon billions of market cap from peers, suppliers, and rivals right along with it.
Just a reminder: anyone remember Morgan Stanley's sudden boosted cap on the amount of Facebook shares clients could grab by tenfold? On such a "hot IPO?"
According to Reuters, lead underwriter on the offering Morgan Stanley (NYSE: MS) cut its outlook on Facebook in a note to its biggest clients ahead of the debut last Friday.
Specifically, Morgan Stanley's note offered lower revenue expectations following an amended S-1 filing with the U.S. SEC. The adjustment was made following disclosure by Facebook that more users were accessing the social media site via mobile devices, a less lucrative method in term of drawing ad revenue. The disclosure left Morgan Stanley with the responsibility to reduce growth expectations until the mobile ad model for Facebook becomes more polished.
Not to say Morgan Stanley didn't want to pump-up the IPO as much as anyone, but investment bank analysts operate differently than the bankers and salesmen of an underwritten IPO. Logically, Morgan Stanley's analyst branch had a duty to provide clients with the best, most up-to-date information available.
Facebook flopped 11 percent Monday following a wishy-washy open last Friday. The stock down more than 6 percent Tuesday. Should Facebook have been anything other than Facebook, shares might've plunged on the very first day of trading, bringing down billions upon billions of market cap from peers, suppliers, and rivals right along with it.
Just a reminder: anyone remember Morgan Stanley's sudden boosted cap on the amount of Facebook shares clients could grab by tenfold? On such a "hot IPO?"
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