From the article: "The firm did this by tapping into a 63 million share over-allotment option, or greenshoe, according to sources familiar with the deal." The title of your post is inaccurate. No one knows for sure how many shares MS bought during the initial day of trading. For a full breakdown of the first day of trading, check out Zerohedge's analysis: http://www.zerohedge.com/news/facebook-complete-forensic-pos..…
Very interesting. I'd love to know how to interpret this: http://www.zerohedge.com/sites/default/files/images/user5/im...
Morgan Stanley bought 63M Facebook shares ($2.3B) to create a floor around $38
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Re: Morgan Stanley bought 63M Facebook shares ($2.3B) to create a floor around $38
#62As I said a month ago. May 17 is a terrible time to IPO. Facebook will be fighting against a falling stock market. Operation twist is about to end, and there are a lot of believers in "Sell in May and go away."
I've heard there are also a lot of believers in "Buy in May, Hip Hip Hooray!". I think both of our believer sayings have about the same amount of credibility...
Sell in may is one of the few statistically proven effects that continues to this day.
Re: Morgan Stanley bought 63M Facebook shares ($2.3B) to create a floor around $38
#63Earlier quoted context omitted.
Can employees still sell their shares on secondmarket now that FB is public?
They might be able to, but there is no real reason to buy on a second market now, so the market would be illiquid. If the employee would want to sell now for fear of a devaluation during the lock out period they could buy put options at the current valuation, haven't checked the price, but those options can't be too expensive right now.
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Re: Morgan Stanley bought 63M Facebook shares ($2.3B) to create a floor around $38
#64A lot of misunderstanding about the greenshoe... It's really simple: The IPO sells X+Y shares, where X is the big IPO number of shares and Y is the "over-allotment". If the stock trades above the IPO price, the money from selling Y shares is given to the IPO company along with the rest of the money from selling X shares. If the stock drops below the IPO price, the underwriters start buying back (up to Y shares * IPOp…
"It is one of the few times outright price manipulation is allowed (which should be a completely different discussion" I'm curious to know what arguments are in favour of it. If they're incorrectly pricing the IPO, surely they should suffer for it and adjust their pricing models and strategies rather than be allowed to manipulate their way around what's pretty much their own mistake? I don't know much about how compa…
Simply put, the argument is that the the 'price' of price manipulation is one the market (read: the purveyors of the exchange who get to make the rules) are willing to allow in exchange for an orderly, stable market. IPOs are hectic times, and they want some stability while the dust settles.