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
#2Re: Morgan Stanley bought 63M Facebook shares ($2.3B) to create a floor around $38
#3We know it was MS that's supporting them at that psychologically important $38 figure, but that $2.3B figure is just speculation. Still, I'm sure there are some very nervous traders this weekend over at MS. Would not be surprised to see a lot of shorts on stocks like Yelp, Zynga as a hedge.
What a disaster this IPO was (for the banks, not for facebook). Though, I'm sure the people at Facebook aren't exactly happy with the way things went and all the (unfair?) negative press / scrutiny that they will receive now.
Re: Morgan Stanley bought 63M Facebook shares ($2.3B) to create a floor around $38
#4I'm confused by this "greenshoe" business.
To prevent the price of something from falling, you can:
(1) Increase its demand.
(2) Decrease its supply.
Which one does the "greenshoe" do?
Re: Morgan Stanley bought 63M Facebook shares ($2.3B) to create a floor around $38
#5I wonder who the counterparties were.
I'd be willing to bet there're some very happy algorithmic traders out there right now.
Re: Morgan Stanley bought 63M Facebook shares ($2.3B) to create a floor around $38
#6We know it was MS that's supporting them at that psychologically important $38 figure, but that $2.3B figure is just speculation. Still, I'm sure there are some very nervous traders this weekend over at MS. Would not be surprised to see a lot of shorts on stocks like Yelp, Zynga as a hedge. What a disaster this IPO was (for the banks, not for facebook). Though, I'm sure the people at Facebook aren't exactly happy wit…
Haha, just wait until/if it drops below $38... the banks could get hosed on this.
Re: Morgan Stanley bought 63M Facebook shares ($2.3B) to create a floor around $38
#7The Wikipedia page on the "greenshoe" gives more detail on how Morgan was able to safely buy these shares: http://en.wikipedia.org/wiki/Greenshoe
Brief summary: Morgan oversells the offering. Facebook gives Morgan the right (but not the obligation) to cover its short position by buying shares at the offering price. This is a defensive maneuver.
If the stock pops, Morgan buys the shares from Facebook at the offering price in order to cover its short. Otherwise they'd have to purchase at the market price (which would cause them to lose money). This is the hoped for scenario.
In the unexpected case, where the stock's price trends below the offering price, Morgan covers its short by buying shares directly from the market (instead of from Facebook). This stabilizes the price of the stock at the offering price and ensures that public investors don't go underwater soon after the offering.
It sounds like there are some complicated maneuvers that the underwriter can pull to make some money off the greenshoe (it's not all flowers and sunshine: http://dealbreaker.com/2012/05/facebook-ipo-goes-nowhere-in-...) but this particular implementation seems relatively good to Facebook and the public investors.
Re: Morgan Stanley bought 63M Facebook shares ($2.3B) to create a floor around $38
#8We know it was MS that's supporting them at that psychologically important $38 figure, but that $2.3B figure is just speculation. Still, I'm sure there are some very nervous traders this weekend over at MS. Would not be surprised to see a lot of shorts on stocks like Yelp, Zynga as a hedge. What a disaster this IPO was (for the banks, not for facebook). Though, I'm sure the people at Facebook aren't exactly happy wit…
I honestly can't see them caring a whole lot. Scrutiny and bad press can only impact your stock prices in the short term; in the long run they'll revert to the mean. If Zuck and co. feel like facebook is a fundamentally strong bet, then they'll be inclined to ignore fluctuations in the price and look to the long term a la Amazon.
Also, Zuck owns 57% of the voting shares, so it's not like he really gives a damn what the traders think.
Re: Morgan Stanley bought 63M Facebook shares ($2.3B) to create a floor around $38
#9Anyone know if FB employees with shares can sell them immediately after the IPO or do they have to wait after a certain period?
Re: Morgan Stanley bought 63M Facebook shares ($2.3B) to create a floor around $38
#10I'm confused by this "greenshoe" business. To prevent the price of something from falling, you can: (1) Increase its demand. (2) Decrease its supply. Which one does the "greenshoe" do?
Decreases supply. They bought up shares on the market, as opposed to buying them from FB itself.