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It's happening again. Facebook (FB -7%) dives in early trading to $31.65 - shares are now down...

It's happening again. Facebook (FB -7%) dives in early trading to $31.65 - shares are now down 17% from their $38 IPO price, though the company's multiples are still high. If Facebook doesn't soon reverse course, class-action suits over last week's increase in its offering price may just be a matter of time. (also)
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Comments (11)
  • Hitesh Patel
    , contributor
    Comments (314) | Send Message
    no support from any institutions and retail already bought at the top....hmmm..the train wreck is far from over
    22 May 2012, 09:59 AM Reply Like
  • frosty
    , contributor
    Comments (702) | Send Message
    Huh?! This sounds like an abuse of the legal system. No one guaranteed the price, value is in the eye of the beholder, anyone buying a 75 p/e new issue is taking a gamble, whatever happened to buyer beware?
    22 May 2012, 10:00 AM Reply Like
  • Windsun33
    , contributor
    Comments (4277) | Send Message
    Hype + Hopium overcomes common sense.
    22 May 2012, 10:03 AM Reply Like
  • proffowler123
    , contributor
    Comments (25) | Send Message
    Additional Information on Morgan Stanley Average First Day Returns:


    According to Renaissance Capital (IPO Tracker):



    Morgan Stanley:


    Number of IPOs:27
    Total Proceeds Raised:$23,814.4 mm
    Average Return:5.1%
    Average First Day Return:15.4%
    22 May 2012, 10:06 AM Reply Like
  • proffowler123
    , contributor
    Comments (25) | Send Message
    With what is happening know, it appears that the underwriters have stepped away.


    I am guessing that trades now will consist of underwriters dumping their shares to retail and will then by them back when the stock is low enought to purchase and then run it up again. They need to make up for the losses and the only way to do it is through the retail route. I predict that this will continue to sink until the it is low enough for for MS (and all the 33+- other banks) to begin to buy back creating another artificial market for retail to get pulled into thinking there is a bull in the area!
    22 May 2012, 10:13 AM Reply Like
  • pmiller100
    , contributor
    Comments (359) | Send Message
    Okay, admittedly I haven't been following this closely, but here's what I think I picked up. At the IPO price, the p/e was in the 80 ballpark? Does that sound right. So, given it's a mature website in terms of users but still trying to prove its ability to grow revenue, would anybody say a p/e of 16 wouldn't be more in line with common sense? By my math, that means a share price of $7.60.
    22 May 2012, 10:17 AM Reply Like
  • RycheMykol
    , contributor
    Comments (352) | Send Message
    "If Facebook doesn't soon reverse course, class-action suits over last week's increase in its offering price may just be a matter of time"


    Huh??? Cool, my DECK I bought really dropped in price, maybe all us shareholders should file a lawsuit?


    Were people forced to buy IPO at gunpoint? Just because these shareholders thought they would get a 100% pop on opening day and didn't doesn't mean they can sue, it means they didn't actually do some investigating into FB's numbers.
    22 May 2012, 10:19 AM Reply Like
  • proffowler123
    , contributor
    Comments (25) | Send Message
    Ryche, I would guess that many of the retail buyers did not even look at the prospectsus, read any financials or even do any analysis. They bought on the name FACEBOOK. As Mr. Greenspan back in 1996 - "irrational exuberance"!


    The "trade" had nothing to do with numbers/analysis, it had to do with the intangible name FACEBOOK. Hence way Beta does not necessarally work all the time, but we are "seeking Alpha" what is that factor that quantifies this process (sorry it is the professor in me)


    They can sue and I am sure that there is are class actions beginning to form in discussion (that is the CFO in me). Just like Vonage, they will find something to latch on too. I would say that just the Instagram announcement/deal during the quiet period plus the announcement about hiring engineers to focus on mobile would be enough for a basis of complaint. With the cash in the bank, a settlement would be the most likely scenario, just like in Vonage case.


    I am not an attorney, nor did I buy shares, these are just general observations (this is the Red Herring in me, don't take what I say as anything but general discussion points, not worth a thing)! I am a GURU (Generally understanding, Relatively Useless). HAHA
    22 May 2012, 10:46 AM Reply Like
  • wald22
    , contributor
    Comments (186) | Send Message
    Just how many shares existed before the IPO that were trading at around $45 before the IPO? How many shares is the IPO? Too many of the pre IPO shares hit the market on day 1. Managment is in bed with the bankster crooks. Good thing is that they all are stuck with shares that are going down in price fast. The bad thing is that the retail public got hyped into buying high to sell low.
    22 May 2012, 10:30 AM Reply Like
  • kmi
    , contributor
    Comments (4042) | Send Message
    I will save us all a lot of time and money on frivolous activity.


    I will rewrite the law, and do it with two words.


    Emptor Caveat. (Buyer, beware.)


    There, done.
    22 May 2012, 12:33 PM Reply Like
  • bmwr1200c
    , contributor
    Comments (192) | Send Message
    it really seems apt to quote master investor Warren Buffett's line now "Price is what you pay, Value is what you get "
    Just because one paid high does not mean that one would get higher value
    23 May 2012, 07:52 AM Reply Like
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