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Tag: Morgan Stanley

  • Facebook and IPO Underwriters Sued by Investors

    If you thought Facebook was in the news a lot for their patent lawsuits, welcome to IPO litigation. Interested parties are crawling out of the woodwork to contest the bullshit events that surround Facebook’s IPO and everyone involved. As we just reported this morning, the Commonwealth of Massachusetts has subpoenaed documents pertaining to Morgan Stanley’s revised revenue forecast the week before the Facebook IPO. The gist of that report is a decreased ad revenue projected for the company spanning the remainder of 2012.

    Now, Reuters has gotten word that some of Facebook’s largest shareholders have filed a suit in New York claiming top executives involved in the IPO concealed critical documents during the IPO’s promotional investor roadshow. Which, actually, we already know they did. The lawsuit was filed today in the U.S. District Court in Manhattan. Obviously the investors are suing for losses and damages stemming from what can only be called a “bad investment”. The complain reads,”the value of Facebook common stock has declined substantially and plaintiffs and the class have sustained damages as a result,”. On Tuesday, a similar case was filed in California relating to the exact same issue.

    As I mentioned this morning, It seems the reaction to the reduced earnings projections was to issue more shares and increase the price of them. If you remember, Facebook added over 50 million shares to the IPO just days before the offering. Now even more suspicious, is the huge amount of shares voluntarily offered by Facebook insiders and early investors, also just before the IPO. It seems like they knew the stock would decline shortly after the offering.

    So it appears a lot of people got rich off the IPO, but unfortunately for some, a lot of people are also going to be sued. So much for the much anticipated Facebook IPO. It may not go down as one of highest revenue generating offers, but it may be one of the biggest scandals. We’ll keep you posted as new information becomes available.

  • Facebook IPO: Morgan Stanley Subpoenaed In Massachusetts

    Yesterday morning we brought you news that Morgan Stanley had lowered Facebook’s revenue forecast in the days before the company’s IPO, but that the news was kept quiet during the IPO roadshow that led up to the IPO on last Friday.

    As you might expect, this news has drawn the attention of a variety of authorities. Yesterday afternoon, Mary Schapiro, Chairman of the Securities and Exchange Commission, announced that her agency would be examining the irregularities surrounding Facebook’s IPO. Now it seems that the state of Massachusetts is also getting in on the act. According to a report from Reuters late yesterday, William Galvin, Masschusetts Secretary of Commonwealth, has issued a subpoena to Morgan stanley. According to a statement obtained by Reuters, the securities division of Secretary Galvin’s office is concerned with “the analyst’s discussion with certain institutional investors about the revenue prospects for Facebook.”

    Requests for comment to Morgan Stanley, the office of the Massachusetts Secretary of Commonwealth, and Facebook have not yet been returned. We will bring you more information about this story as it unfolds.

  • Facebook IPO: Underwriters Fail to Prop Up Demand

    Facebook IPO: Underwriters Fail to Prop Up Demand

    After Friday’s botched Facebook IPO, where trading prices barely exceeded the $38 per share target price, things looked even worse yesterday. The market closed at just over $34 per share for Facebook. Now many banks offering the stock say they were bombarded with too many shares the day of the IPO.

    According to the Wall Street Journal, it is common practice for many banks to ask for twice as many shares as they actually want in a big tech IPO like this, because the typical result is they get half as many as they ask for. In this case those banks actually got what they asked for and more. The sudden availability of shares had a devastating effect on some of the institutions involved.

    An anonymous hedge fund manager commented to the Wall Street Journal:

    “This has been a train wreck,”

    The relatively large number of shares available combined with an increased per share price and a very recent reduction in forecasted revenue growth caused retail and investor demand to suffer greatly. Offering fewer shares at a 10% lower price could have made a dramatic difference in the performance of Facebook trading.

    Michael Pachter, an analyst at Wedbush Securities comments on the Facebook IPO:

    “The underwriters completely screwed this up,”

    “should have been half as big as it was, and it would have closed at $45.”

    As we reported earlier today, Morgan Stanley had some help from an allegedly suppressed reduced revenue forecast and may have actually bought up fewer shares of the stock to help boost the IPO than would normally be expected. This may have caused there to be even less demand by leaving more shares available, but earning them more in trading fees. Of course, none of Morgan Stanley’s approach during the IPO has been verified, so we are left wondering what exactly happened to cause the shares to perform so poorly.

    We will be watching Facebook trading closely again today. Hopefully the market will close much closer to that $38 per share target price. Check back regularly for breaking news and updates.

  • Analyst Says Amazon To Earn $100B In Revenue In 2015

    Everyone awed by Facebook’s $50 billion valuation may want to break away for at least a moment to consider Amazon’s future.  An analyst with Morgan Stanley has predicted that Amazon will generate an impressive $100 billion in revenue in 2015.

    To put that in perspective: Amazon reported $7.56 billion in revenue during the third quarter of 2010, $6.57 billion during the second quarter, $7.13 billion during the first quarter, and $9.52 billion during the fourth quarter of 2009 (totaling $30.78 billion), so $100 billion in a single year will represent a huge increase.

    Still, summing up a report authored by Morgan Stanley’s Scott Devitt, Larry Dignan wrote, "Amazon is likely to hit $100 billion in annual revenue and is on a growth path that eclipses the world’s most successful retailer – Wal-Mart."

    That’s in part because "[i]nternational expansion continues," "[n]ew efforts such as Amazon Web Services and digital sales via the Kindle platform are promising," and "[s]ubscription e-commerce for grocery staples is another promising avenue."

    Also, as reported by Dignan, "Amazon can fuel growth just by taking wallet share from its existing customers. Amazon’s 121 million customers spend about $275 a year.  Wal-Mart’s 300 million customers spend $750 a year excluding groceries and Sam’s Club."

    This situation will definitely bear watching.  And for what it’s worth, Amazon’s stock rose 0.43 percent during normal trading hours today and is up another 0.08 percent so far in after-hours trading.

  • Morgan Stanley Raises Google Price Target By $30

    Global financial services firm Morgan Stanley has a lot of confidence in Google.  This morning, the organization added Google to its "Best Ideas" list, and also upped its price target on the search giant by an impressive $30.

    That second change takes the price target Morgan Stanley’s established from $700 to $730 and signals some high expectations.  Google’s stock was at $578.36 this morning before the market opened, meaning the $700 target already required an increase of 21.0 percent.

    Now, in order to hit $730, the value of Google’s stock will have to soar by 26.2 percent.

    That perhaps brings us back to the "Best Ideas" list.  Morgan Stanley isn’t making a wild guess or even relying on historical info.  The firm explained when it launched the list last year that chosen companies must boast "[a] differentiated out of consensus money-making idea with fresh data and analysis."

    GoogleAlso, it’s necessary that selected corporations have "[a] favorable risk-reward ratio" and "[c]lear catalysts."

    So – although we’re in no way trying to give investment advice – maybe look for Google’s stock to hit $730 in the not-too-distant future.  It’s already risen to $590.65 this morning, when makes for a good start.