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Analysts at Facebook's (FB) lead underwriters cut their revenue estimates ahead of the IPO,...

Analysts at Facebook's (FB) lead underwriters cut their revenue estimates ahead of the IPO, reports Reuters, passing the information on to a few of their key clients. "My biggest hedge fund client told me they lowered their numbers right around mid-roadshow," says an IPO researcher. He still bought the issue, he says, but flipped it immediately and went short. Shares -3.8% premarket.
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Comments (15)
  • Rhianni32
    , contributor
    Comments (2078) | Send Message
     
    People need to stop looking for blame for it not doubling in the first day. It has a P/E 100.
    Case solved
    22 May 2012, 08:36 AM Reply Like
  • Tricky
    , contributor
    Comments (1590) | Send Message
     
    Indeed, I find it quite amusing that a company is able to enjoy the biggest tech IPO of all time, the 3rd biggest of any IPO of all time, and it's a "failure". But perhaps I don't appreciate that Wall Street was entitled to a doubling on its first day -- cause the investors should have all that premium, instead of the company and its pre-IPO investors.

     

    Sarcasm aside, I do appreciate that Facebook should have left a bit on the table in order to help drive enthusiasm for secondary offerings.
    22 May 2012, 09:01 AM Reply Like
  • KISS_investor
    , contributor
    Comments (375) | Send Message
     
    I've fed at the Wall Street trough..

     

    So i have seen greed and blind stupidity..this facebook ipo was greed and stupidity to the power of infinity!!!

     

    i think my favorite moment was yesterday, when they had a panel on cnbc that among other things, discussed whether this IPO was overhyped after being the nothing but facebook channel for 2 weeks..

     

    to hear that underwriters goosed down the numbers last minute is not surprising but no less immoral...
    22 May 2012, 08:42 AM Reply Like
  • rambler1
    , contributor
    Comments (631) | Send Message
     
    How do you legally short a new issue unless your a market maker?
    22 May 2012, 08:44 AM Reply Like
  • serndipity
    , contributor
    Comments (193) | Send Message
     
    Being a registered broker/dealer? There are a ton of them out there.

     

    Almost all of the trades were through the electronic exchanges (e.g. EDGX, BATS, ARCA, NSDQ)
    22 May 2012, 08:51 AM Reply Like
  • chicagotiger
    , contributor
    Comments (17) | Send Message
     
    as long as he was able to get a legal borrow from non-underwriter bank (meaning anyone on the cover of the FB prospectus can't lend shares for 30 days) -- he can short the IPO -- unlike most IPOs there were a lot of shares in this float, so it is likely another institution was able to borrow the shares. If you sell short without a borrow - that is called a naked short sale and another discussion...
    22 May 2012, 11:30 AM Reply Like
  • davidingeorgia
    , contributor
    Comments (2713) | Send Message
     
    A classic pump and dump writ large, but no one was forced to buy the stuff.
    22 May 2012, 09:16 AM Reply Like
  • sad_retail_trader
    , contributor
    Comment (1) | Send Message
     
    Actually, I canceled a trade in the "limbo" period and was given the stock at 3:59 PM EST for $42.00. I do feel that I was forced to buy.
    22 May 2012, 12:56 PM Reply Like
  • KISS_investor
    , contributor
    Comments (375) | Send Message
     
    .....within a couple weeks we are gonna be looking at the lawsuits!!

     

    couldn't happen to a nicer group of people..

     

    it also appears that there is no contagion which to me is helpful...
    quite the opposite, the market is sighing relief that its over..

     

    this is possibly a poster child for how to NOT IPO..
    22 May 2012, 09:49 AM Reply Like
  • WMARKW
    , contributor
    Comments (10700) | Send Message
     
    Lawsuits....and I hope they include JPM (Just Plain Malevolent) and Goldman Suchs as well as Morgan stanley.
    22 May 2012, 01:24 PM Reply Like
  • Spencer Knight
    , contributor
    Comments (417) | Send Message
     
    People can sue all they want. They won't win a dime.

     

    FB was a complicated deal and non-professional traders should have stayed away at all costs. I couldn't believe my ears to hear people that have never bought public equities before were buying/trying to buy FB on the IPO day.
    22 May 2012, 01:57 PM Reply Like
  • WMARKW
    , contributor
    Comments (10700) | Send Message
     
    I suspect the OWS crowd were heavy purchasers.
    22 May 2012, 02:53 PM Reply Like
  • mnomis
    , contributor
    Comments (55) | Send Message
     
    Surprising comment - the most over-hyped IPO of all time, with nearly a billion users, and you find it surprising that retail investors got excited (and fleeced) while insiders cashed out at their expense?
    22 May 2012, 03:15 PM Reply Like
  • spfelton
    , contributor
    Comment (1) | Send Message
     
    There is nothing complicated about releasing one estimate to one group and another estimate to another group Spencer. This is fraud and should be prosecuted as a RICO case. The underwriters would be vulnerable to civil jury trials where the people who were defrauded get the opportunity to seek treble damages.
    22 May 2012, 03:29 PM Reply Like
  • beachtrader
    , contributor
    Comments (120) | Send Message
     
    FB is definitely overvalued and overrated ...FB is a social entity and who pays attention to ads when the participants just want to socially connect. FB will find it difficult to monetize and retailers will just bail out. FB is not a GOOGLE...but a GAGGLE.

     

    FB was overhyped from the start...the underwriters were greedy.
    22 May 2012, 04:25 PM Reply Like
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