Home » facebook » Why facebook ipo debut disappointing market May 18 2012

Friday, May 18, 2012

Why facebook ipo debut disappointing market May 18 2012

Why facebook ipo debut disappointing market May 18 2012 : Facebook, the No. 1 online social network, disappointed investors with a tepid market debut on Friday. Shares rose a scant 0.6 percent - nowhere near expectations for double-digit gains on the first trading day - and the day was marred by technical problems due to huge order volume. The stock closed at $38.23 after falling as low as $38, its initial offer price.

The disappointing debut curbed investors' appetite for other social media stocks. Hardest hit was Zynga Inc, which closed down 13.4 percent to $7.16 after falling as low as $6.40. The stock was temporarily halted twice due to sudden declines.

In any brand new area, social media in this case, most are going to be losers and only some are going to be winners. Yes, the IPO was disappointing, but Facebook is clearly the winner here and others aren't

Morgan Stanley made big bet on Facebook
Lead Facebook Inc (FB.O) underwriter Morgan Stanley (MS.N) took a bet earlier this week when it increased the size of the social networking firm's $16 billion initial public offering and it boosted the price.

After a delayed start to trading, Facebook's shares spent much of the day struggling to stay above the $38 IPO price - and ended with just a 23-cent gain.

As a result, Morgan Stanley may have spent billions of dollars to support the stock price by buying shares in the market. Some market participants said that the underwriters had to absorb mountains of stock to defend the $38 level and keep the market from dipping below it.

The firm did this by tapping into a 63 million share over-allotment option, or greenshoe, according to sources familiar with the deal.

As an indication of the cost, had Morgan Stanley bought all of the shares traded around $38 in the final 20 minutes of the day, it would have spent nearly $2 billion. Underwriters are not obligated to prop up a stock on debut, but typically do.

For the latest updates on the stock market, PRESS CTR + D or visit Stock Market Today For the latest updates PRESS CTR + D or visit Stock Market news Today

Related Post:

Posted by at
Labels:

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)