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India On Media |
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| Technology
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| Facebook debut raises questions |
| Facebook debut raises questions on IPO process
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| UNITED STATES OF AMERICA
, 23-May-2012
5:3:4 AM |
| Just days before Facebook went public, some big investors grew nervous about the company's prospects.
After publicly warning about challenges in mobile advertising, Facebook executives held conference calls to update their banks' analysts on the business. Analysts at Morgan Stanley and other firms soon started advising clients to dial back their expectations. One prospective buyer was told that second-quarter revenue could be 5 percent lower than the bank's earlier estimates.
As investors tried to digest the developments, Morgan Stanley was busy setting the price and the size of the stock offering. While some big institutions scaled back on their plans, others placed large orders. And retail investors clamored for shares.
In the end, Facebook and the Morgan Stanley bankers decided they had enough demand and interest for Facebook to justify an offering price of $38 a share.
They didn't.
When Facebook went public on Friday, its shares barely budged - and they have been falling ever since. On Tuesday, the stock closed at $31, more than 18 percent below its offering price.
The IPO of Facebook was supposed to be Morgan Stanley's crowning achievement, but it is turning out to be a big embarrassment, raising broader questions from regulators about the IPO process.
Over the last year, Morgan helped usher in a new generation of technology companies, leading the offerings of LinkedIn, Groupon, Pandora and more than a dozen other start-ups. Facebook was poised to be the biggest and most ambitious. When the dust settles, Morgan Stanley could make more than $100 million in fees on the I.P.O
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