Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow • Hacker News Board

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#81

Post by thereason » Wed, May 23, 2012, 12:00 AM UTC

cube13 wrote: post #60

chernevik wrote: post #58

Earlier quoted context omitted.

Estimates of underwriters' estimates are presumed to be indicative of management opinion. That's a touch shady to begin with, ideally the analysts shouldn't have any "extra" information in the first place, right? Given that a change in those estimates is interpreted as a change in management opinion -- if that change is communicated to one set of investors, the others are disadvantaged. To me a lot of this falls with…

The facts were public. The analysis was not. Here's the information that the analysts were working off of: http://www.sec.gov/Archives/edgar/data/1326801/0001193125122... The facts were that Facebook had less profit for Q1 2012 than Q1 2011, despite making 25% more revenue. It was blamed on lack of new revenue from the mobile space. The "disadvantage" is to people who were blindly buying Facebook without doing due di…

How many investors do you think were reading every amendment to the S-1 up to May 9? Not even considering how many did not read the S-1 to begin with.

The use of the Greenshoe tactic to make the price appear stable also seems to suggest they were targeting naive investors who would only be watching the share price after trading began, having no regard for who was buying them.

Please tell me I'm wrong.

As for Henry Blodget, while he may be biased in favor of sensationalism to garner pageviews, he seems to be in a unique position to comment on this sort of maneuvering to manipulate naive "web investors". He was once in the center of it, during the first Bubble. We cannot say the same for the WSJ's writers.

Please tell me I'm wrong.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#82

Post by nicoviarnes » Wed, May 23, 2012, 1:02 AM UTC

ktizo wrote: post #73

cpeterso wrote: post #62

Earlier quoted context omitted.

Business insiders.

Dangerous assumption. The title might only be a clever ruse. Personally I suspect it is a shadowy cabal of part time gooseberry farmers.

There is no doubt.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#83

Post by nknight » Wed, May 23, 2012, 1:20 AM UTC

maybird wrote: post #2

I really don't want to mentally lump Facebook with Groupon. I hope we hear an official statement about this from Facebook.

You don't need to.

Groupon's business model was ridiculous from the beginning, and they actively engaged in attempts to manipulate their earnings numbers.

Facebook's model is fundamentally unremarkable and quite similar to a number of other profitable companies. You can question the strategy and execution, but the general model is known to work. Here questions are being presented about how forecasts were handled in the run-up to the IPO. Based on what we know/suspect, the underwriters would necessarily be implicated in any actual wrongdoing, but there is thus far little evidence to suggest Facebook made any sort of Groupon-like manipulation or coverup attempt. It can and should be investigated, but we're a long way from torches and pitchforks on Zuckerberg's front lawn.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#84

Post by davidmr » Wed, May 23, 2012, 2:01 AM UTC

16s wrote: post #56

guelo wrote: post #4

It is not possible to trust Wall Street, the whole thing is built on insider trading. They call customers that are not on the inside "dumb money" and unashamedly try to figure out how to take their money.

Absolutely. The concept of 'diversification' was fabricated to convince 'dumb money holders' to give up more cash. That's the sole purpose of diversification. "You really need to diversify just a bit more. With as little as 50,000 dollars more, we can expose your portfolio to international rising growth stocks in Asia."

Are you being sarcastic? I genuinely can't tell.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#85

Post by sevenstar » Wed, May 23, 2012, 2:29 AM UTC

ktizo wrote: post #74

jpdoctor wrote: post #14

Earlier quoted context omitted.

> It is not possible to trust Wall Street, the whole thing is built on insider trading. As the old saying goes: If you don't know who the sucker at the table is, it's you.

And sometimes it is still you, even when you think you know otherwise.

Depends on the intelligence of the person and the complexity of the ruse. The most powerful deceptions are those just under our noses.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#86

Post by [deleted] » Wed, May 23, 2012, 3:16 AM UTC

cube13 wrote: post #27

JumpCrisscross wrote: post #25

The original Reuters article does a better job explaining this than the link-bait title here: http://www.reuters.com/assets/print?aid=USBRE84L06920120522 FB amended their S-1 to lower revenue forecasts. Following that, a research analyst at Morgan Stanley cut his revenue forecast on FB close to their IPO. Nothing here should fire anyone up. Equity research must be conducted independently of the investment bankers' no…

>A research analyst at Morgan Stanley cut his revenue forecast on FB close to their IPO. Following that, FB amended their S-1 to lower revenue forecasts. The latter may have been informed by the former but it cannot be said that the former was influenced by the latter without more information. It was the opposite. Facebook filed the amended S-1, and Morgan Stanley, JPMorgan Chase, and Goldman Sachs changed their fore…

[deleted]

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#87

Post by Drbble » Wed, May 23, 2012, 3:54 AM UTC

spydum wrote: post #13

vijayr wrote: post #7

Earlier quoted context omitted.

Is it this bad in Europe and Asia? or just in the US? Almost every day we hear banks doing this, banks doing that - most of it is unethical, and many of it probably illegal, yet nothing seems to be happening to them. This is depressing.

Ethics and legality don't always align. You will always find people who are willing to push the ethical line a bit further out to satisfy their greed. Then of course, it's not too much further to meander across that legal line as well. What can government/regulators do? If they respond harshly and abruptly, they are criticized as being too heavy handed, and enemies of capitalism. If they respond slowly and deliberate…

Paraphrasing: If government does the right thing, criminals hate them, and if they do the wrong thing, victims hate them.

What can they do, indeed?

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#88

Post by Drbble » Wed, May 23, 2012, 3:59 AM UTC

thereason wrote: post #81

cube13 wrote: post #60

Earlier quoted context omitted.

The facts were public. The analysis was not. Here's the information that the analysts were working off of: http://www.sec.gov/Archives/edgar/data/1326801/0001193125122... The facts were that Facebook had less profit for Q1 2012 than Q1 2011, despite making 25% more revenue. It was blamed on lack of new revenue from the mobile space. The "disadvantage" is to people who were blindly buying Facebook without doing due di…

How many investors do you think were reading every amendment to the S-1 up to May 9? Not even considering how many did not read the S-1 to begin with. The use of the Greenshoe tactic to make the price appear stable also seems to suggest they were targeting naive investors who would only be watching the share price after trading began, having no regard for who was buying them. Please tell me I'm wrong. As for Henry Bl…

An investor who didn't read the s-1 was just wandering through a casino pulling slot machines without even reading the payout disclosures. There is right reason such an investor should profit. If that investor runs a fund for your capital, he should be fired.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#89

Post by Drbble » Wed, May 23, 2012, 4:02 AM UTC

tatsuke95 wrote: post #67

lmm wrote: post #44

Earlier quoted context omitted.

Does facebook actually lose anything? It sounds like they walked away with the maximum amount of money possible; the bankers might be upset, and I can see that might make it harder for facebook to raise money in the future, but they're unlikely to need to for a while yet.

Every employee who is locked into their shares for 6 months is losing money every day.

Find me one employee who would feel ripped off that their 5000, 10000, or 100000 sell at even $20 instead of some hypothetical number could have been achieved by better hypothetical management. Oh those poor people, should have taken the offer to work at _____ instead?

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#90

Post by Drbble » Wed, May 23, 2012, 4:05 AM UTC

sparknlaunch12 wrote: post #70

No surprises here. I always cringe when I see 'mum and dad' flotations. These type of deals are always plagued with bias, mostly in the favour of the big guys. The poor retail investors get sucked in by the allure of holding a brand name or having boasting rights. This thinking is dangerous when making an investment. I doubt most people would throw $1000 on a sports bet but quite happily to throw in more on buying a…

Some people read the sports pages, some people read the business pages, but they are reading the same paper and they aren't so different from each other.