Of $16B FACEBOOK shares sold to new investors, $11.76B were purchased by the underwriters!!!

[Prometheus Bound]

Looks like Morgan Stanley, Goldman Sachs and JP Morgan are going to lose a lot of money on Monday, unless they can somehow keep manipulating the market until millions of suckers fall for the hype and start buying.

Facebook IPO fight-back begins: share price 'implausible', says analyst
....Company filings after the market closed on Friday night however revealed the extent to which the banks who led Facebook’s initial public offering - in which $16bn of shares were sold to new investors - were forced to move in to the market and buy shares in order to keep the price above the $38 level. Morgan Stanley, Facebook’s lead financial adviser, ended the day with 162m shares, worth $6.16bn. Other banks including JP Morgan and Goldman Sachs also bought shares, ending the day with $3.2bn and $2.4bn holdings respectively.....

http://www.telegraph.co.uk/technology/facebook/9276699/Facebook-IPO-fight-back-begins-share-price-implausible-says-analyst.html

[Zalatix]

1. Let me see if I get this right...

would it be wiser to short Facebook, given this level of risk?

[exboyfil]

2. Remember these companies have managed stock portfolios

and actively managed mutual funds. There higher ups also play golf with the higher ups of the big pension funds and other publicly invested funds.

I have said before I think they will lay a lot of this paper out on those organizations.

[monmouth]

3. Or in real layman's terms, the day was starting to go crappy and a prop-up was needed..n/t

[leftyohiolib]

6. their ipo needed a bailout?

[PSPS]

4. They always do this

Whenever there's an IPO, the underwriters put in buy orders for the initial offering price to make sure it won't fall below it. This is done solely for promotional purposes because it would be a disaster if an IPO ended up trading below the initial price.

The fact that Facebook ended the day at about the initial price (up 0.6%) means it was a flop. But it isn't surprising. The company makes nothing, and even the initial price is a P/E of about 100, which is ridiculous. I also noticed the media really pushing the "pump & dump" script like Louis Rukeyser used to do. "Now is a great time to buy Facebook," says the columnist who just bought a bunch of shares he wants to sell for a profit.

The underwriters made a bundle, though -- almost $200 million for a day's work.

[Prometheus Bound]

5. But so they buy such a high percentage?

I mean, they stand to lose 10 times or more what they made in fees.

[bhikkhu]

8. It depends on how the underwriting deal was written

one way or another it probably is a gamble for them, as is any IPO, but there are ways to mitigate risk that can be worked out in advance and written into the contract. There's plenty of cash at play on the fat end of things, and I wouldn't be surprised if some of that isn't guaranteed as protection for the underwriters, who were probably bound to support the price of the offering.

[underpants]

7. Posting on Facebook!

They have no business model and are at their peak - at best

[Scurrilous]

9. K & R