Posts filed under “IPOs”
(Are we sick of discussing this yet?)
Market strategist Barry Ritholtz explains his views on the Facebook IPO debacle and why the social-networking company has no one to blame but itself for the mess due its greed, which he describes as not that far below that of Bernie Madoff.
5/24/2012 4:52:31 PM
Did Facebook Feed Inside Information to the Big Boys … While Leaving the Individual Investor In the Dark?
Reader McFid – who has been a breach of fiduciary duty expert since 2003 – sent me the following article:
Today, The Daily Beast reports that certain underwriters may have lowered their revenue projections prior to the IPO AND may have informed some investors; but not all investors. I was jammed up last week and could not get the fact out of my mind that while on the road show that there would be private one-on-ones for certain investors. The general road shows surface questions, many questions over and over; there is no doubt that these questions (I wasn’t there) were laser focused on revenues; whether new models compared to pre-IPO or ARPU (average revenue per user). The private one-on-ones cast extreme scrutiny on revenue numbers and assumptions – past present and future. NO DOUBT: When underwriters, no doubt listening, perhaps bristling and responding to potential investor’s questions, probes and scrutiny – likely, as is often the case when more than two people look at the same set of numbers, raised some hard-to-dispose-of aka troubling issues causing them (apparently) to adjust projections DOWN; but they decided not to disseminate that to ALL investors. What are the future prospects? Some may ask with approximately 800 million users how many more would sign up in the future? And given the anti-climactic IPO fallout how many will remain active, revenue paying users? Facebook’s tagline ironically is, I believe, to promote a more open, transparent and connected world. Really? There can’t be a more prominent example … of information assymetry; unequal, untimely and incomplete information – perhaps knowing, willful and intentional and approaching recission of all those IPO allocations – si?
Morgan Stanley selectively disclosed the change in Facebook estimates.
Business Insider confirms that this might be a big story:
The analysts cut their estimates because a Facebook executive told them to, a source tells us.
The information about the estimate cut was then verbally conveyed to sophisticated institutional investors who were considering buying Facebook stock, but not to smaller investors.
The estimate cut appears to have influenced the investment decisions of at least some institutional investors, dampening their appetite for Facebook stock, and crucially affecting the price at which they were willing to buy Facebook stock.
As I described earlier, at best, this “selective disclosure” is grossly unfair to individual investors who bought Facebook stock on the IPO (or at any time since).
At worst, it’s a violation of securities laws.
This latest chapter in the Facebook IPO story began this morning, when Reuters’ Alistair Barr reported that the research analysts at the company’s lead underwriters—Morgan Stanley, Goldman Sachs, and JP Morgan—had cut their earnings estimates for Facebook during the company’s IPO roadshow. This was highly unusual, if not unprecedented (I’ve been in and around the tech IPO business for almost 20 years, and I’ve never heard of it happening.)
What a piece of work is a man, how noble in reason, how infinite in faculties, in form and moving how express and admirable, in action how like an angel, in apprehension how like a god! the beauty of the world, the paragon of animals—and yet, to me, what is this quintessence of dust? Man…Read More
Given the insane hype surrounding the Facebook IPO, it should really have come as no surprise to anyone that it’s being perceived as a massive flop. (A search at the NY Times website turns up no articles about Cisco Systems 1990 Initial Public Offering (Feb 16, 1990 at a split-adjusted price of $0.06); it does…Read More
May 18 (Bloomberg) — Barry Ritholtz, chief executive officer of FusionIQ, an equities research firm, talks about the initial public offering of Facebook Inc. and the social network company’s growth outlook. Ritholtz speaks with Erik Schatzker, Sara Eisen and Scarlet Fu on Bloomberg Television’s “InsideTrack.”
Bloomberg, May 18, 2012
Inside Track Bloomberg Surveillance This morning, I am doing double duty at Bloomberg — from 7:00 am to 8:00 am, I will be on Inside Track with Erik Schatzker discussing the IPO you are already to sick to death about. Then from 8:00 am to 10:00 am, I will be guest hosting Bloomberg Surveillance…Read More