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UPDATE, 2:30 PM: Massachusetts Secretary of Commonwealth William Galvin is conducting his own investigation into what Morgan Stanley told big investors about Facebook, and when the disclosures took place. A spokesman tells Reuters that the office has issued a subpoena to Morgan Stanley regarding “the analyst’s discussion with certain institutional investors about the revenue prospects for Facebook.”
PREVIOUS, 1:07 PM: Facebook CEO Mark Zuckerberg may rue the day he agreed to take his company public. The share price fell 8.9% today — to $31.01, or $6.99 below the offering price on Friday — after SEC chairman Mary Schapiro said that her agency plans to investigate “issues” involving the IPO. While she wasn’t specific, her comment came as Reuters reported that the consumer Internet analyst for Morgan Stanley, Facebook’s lead underwriter, recently slashed his revenue forecasts for Q2 and all of 2012 — and that news was passed along to institutional investors during the company’s road show but not to the public. If true, then it could have violated laws that bar companies from selectively disclosing important information to certain shareholders. It also could explain why institutional buyers chose not to buy Facebook shares as the price fell on Monday and today. “This is a classic example of investor greed, including institutional greed and underwriter greed and company greed,” Vanguard CEO Jack Bogle said on CNBC. ”So the message is, when all the parties to a transaction are greedy, this is the kind of outcome you can expect.” Yesterday, the Financial Industry Regulatory Authority said it will review what happened on Friday, when investors trading about 30M Facebook shares weren’t given confirmations for their transactions, a major snafu.
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So, are they going to make a movie about FB going public now?
‘The Social Network of Greed’
???
“The UNsocial Network” directed by Steven Soderbergh, starring Johnny Depp as Mark Zuckerberg and Katherine Heigl as an evil SEC chairman.
Zukerberg didn’t “agree” to go public, he was forced by SEC rules to do it.
He had to cash out his early investors somehow. He had to go public. However, the arrogance greed will lead to FB’s swift decline.
their is no sec rule on ISP. He chose to go public because fb ain’t growing on an advertising model.
Microsoft had a browser, word processing and software. You don’t need fb to sale anything as noted by general motors adv pullout. Fb is for old people.
Anyone who got caught up in the hype and bought at IPO is an idiot. You don’t need to know anything about the market to know that. The only people that bought were looking for a quick buck and deserved to get screwed because they didn’t understand what they were buying.
first rule is… how does the company I’m buying earn money?? Facebook makes money off advertising. Did anyone who bought the stock bother to look at the ads on Facebook? They are more “mom and pop” than satellite radio. At least w/ satellite radio people pay a monthly subscription fee.
Facebook’s 900M users (overinflated but nonetheless) use Facebook to get away from ads and half it’s users grew up on a free and open internet… so they are not about to begin paying for it. They will move on to something hippier and cooler if that happens.
It’s called Pinterest.
Pinterest isn’t ANYTHING like FB. It’s fun, but they’re two entirely different social media platforms.
Only there isn’t anything hipper and cooler as of yet. Google+ bombed and won’t ever catch up with FB’s massive user base. What else is there that could even marginally compete?
LOL! That’s what MySpace said when it was on top.
that’s what aol said, too.
He is correct though. Google+ has indeed failed badly.
Why are they investigating the Facebook IPO after the sale rather in the months leading up to the IPO? I mean. . .it just does not make any sense (no pun intended). It makes perfect billion dollars and cents! Doesn’t it?
They aren’t investigating their ipo. they’re investigating whether or not morgan stanley sabotaged it.
One of the ways to estimate value of a company is to ask “How much would the end user pay for the service or product?” Of the 900M users on Facebook, how many of those users would pay a membership fee to Facebook? Just a guess, but I am thinking very few. KN
The greed is that they priced the company at 100 billion dollars. It may end up being one(I doubt it) but definitely not right now. So of course the insiders get to cash out like this is a 100 billion dollar company with no proof of that yet, and sucker investors are the ones holding the bag on a POS stock. When the market cap is 20-25 billion then maybe it is worth a look. The IPO should have been half the value at the very least.
I like that their will be an “investigation”. Right. How’s that justice dept
investigation” from the 2007 meltdown going? It’s goin’ nowhere fast.
Facebook has to start charging all users $1 a month or they are sunk. $900 million bucks a month is pretty good revenue. Anyone who likes the site will be happy to pay that minimal amount. They’d be happy to pay $5 a month for additional features.
It seems to me a no-brainer that a competitor to Facebook that doesn’t rape private information in order to make a buck, and offers similar if not the same social conventions – or improves upon them – could draw quite a crowd globally. Maybe not overnight but perhaps those nostalgic “bubble” fumes are gone. I don’t think you can get around it : your teenager’s prom pictures…are Mark Zuckerberg’s ticket to money and power…which, increasingly, seems to be all that Facebook (and Zuckerberg) cares about. It’s being permitted to exist as a global monopoly. To my knowledge nothing else has that carte blanche credit. That Zuckerberg timed his “secret wedding” to the I.P.O. – was quite odious.
The underwriters did their job well, they are not beholden to the secondary market (me, you, everyone on this board) their only obligation is to institutional investors — so for that, Morgan Stanley did their job well. The CFO and COO (David and Stacey?) of Facebook need to be investigated for floating more shares right before the IPO (they told MS to do this and MS follows orders) and diluting shareholder equity.
This whole thing is a fucking mess….of biblical proportions….and should shed some significant light on how the IBANKS take orders from their about-to-go-IPO Clients….
100 times earnings? huh? WHAT COMPANY TRADES OR EVEN GOES IPO AT 100 TIMES EARNINGS?
Facebook doesn’t make anything and they haven’t figured out their advertising without throwing everyone’s privacy down the toilet…
this is a $10 stock..
-RnsW
Social media elected a president and will do it again. FB’s COO Sandberg packing her office this holiday weekend moving back to DC!! Why stop with FB, 1-2 years left. Did you really think this was the cool-aid to last a generation? There are over 45 social media outlets. At least your shares are not issued on paper stock cert so you can frame them along with the other dead IPOs.
As long as they have 600 million users, they’ll be fine. Even at $10 a share, this gives them a gigantic war chest to play with. As people have already said, there isn’t anything else even close to resembling a true successor to FB. Something fundamental about the way we use social media has to change before people abandon FB for any of the current competitors (not dissimilar to how China favors its Twitter-clone Weibo over its shoddy Friendster-clone Renren).
By the way, the person who said Pinterest. Wow. Really? Are you 12?
Facebook claims to be social media, when in fact the foolish people who subscribed will in fact be subject to identity theft by hackers, replete with photos, ages, etc. How facebook lasted so long is a tribute to spin doctors. and the lack of attention by Americans in our age of technology. Looking for Facebook stocks to go below junk bond status, and the rip-offs can go to Taiwan, China, or wherever with their ill gotten gains, from America where they refuse to pay taxes, but made their fortune in US.
The same Wall Street greed that caused the US financial meltdown is still alive and well. Unless the culprits are brought to trial and jailed, we will continue to be subject to these atrocities, with exponential impunity.