On the other, the shape of the daily curve looks like it was supported at that level artificially.
Even if not, it doesn't look like there's a lot of market confidence for it at this level.
http://lockerz.com/s/209964861
It's easy to overlook the graphic; it's the thin black bar with faint text. It shows:
Bid (size): 38.00 (x9999900) Ask (size): 38.01 (x146300)
@pkedrosky: Watching certain underwriters try to keep certain IPOs above their issue price reminds me of playing Missile Commander, at scale.
Still, this isn't necessarily a negative for Facebook. They optimized their take, and Zuckerberg won't be needing the market's approval or capital again for a while.
Banks can't take on too much risk on their books.. especially in the post Dodd-Franks world.
A lot of people could thusly call that perfectly acceptable risk.
Exec resignations & the CEO apologizing doesn't sound like a lot of people are very accepting of the risks taken.
It's a big fraction, but it's just one quarters profits. It's not the destabalizing, company-breaking amount of money some people make it out to be.
JPMorgan has over a trillion dollars in assets on its books. The chicken-little nature of this has been a little silly I think.
JPMorgan is not out of the woods, they have to unwind their positions to an unfriendly market. This ordeal may also make them more risk adverse, but possibly less profitable in the short-term. Less profits, more losses, isn't going to make people very happy.
I don't think it's the end of JPMorgan, but acting like they have $3 - $5 billion in the couch cushions doesn't sound very rational either.
FB is being propped up to lure in "retail" investors. Retail investors == "muppets" == dumb money. If FB stock is so great then Goldman would be holding onto it themselves. Are they doing that? No. They are selling. $38 is their exit point. Anyone who's buying in will be left holding the bag. That is the whole point.
Technically, but the minute you go public you have to worry about the stock price. If the stock drops (IMO, it will drop here) expect a deluge of doom and gloom stories from the media questioning their business model and everything else in between. Then you may have unhappy employes due to the stock drop, harder time hiring, higher expenses since the stock price isn't rising and so on. Bezos did it so far, but it isn't easy. Zuckenberg sold a nice chunk of his $100 Billion company, buyers will be vocal if the price drops.
FB will have to do everything right for a few years just to justify the $100 billion price tag. It's not easy as ads can drive people away.
They build rather fake barricade.
edit: depends how the big fish will play, you may see none of these Monday morning. Its probably just a hand of underwriters keeping 80% of that shares. If they withdraw, you may see only 25000 shares at $38, for example [so it will be much easier for the stock to go deeper].
This is the reason IPOs work the way they do, with investment banks underwriting it. They get a large profit (potentially huge profit) in exchange for providing the services of a market-maker in the stock at $38/share.
There was nothing nefarious, just market making.
I mean, do you really believe they were offering $300MM of stock ready to sell on an "open action". They would all shit their pants if someone would have actually execute that.
No, what they did was not illegal, But yes, what they did was unethical and anyone knowing anything about trading will take it as a negative sign in terms of this stock's performance.
"Stabilization is the bidding for and purchase of securities by an underwriter immediately after an offering for the purpose of preventing or retarding a fall in price. Stabilization is price manipulation, but regulators allow it within strict limits - notably that stabilization may not occur above the offer price. For legislators and market authorities, a false market is a price worth paying for an orderly market."
EDIT: Just included the full description.
When the price is determined, the shares are ready to publicly trade. The underwriter has to ensure that these shares do not trade below the offering price.
If the underwriter finds there is a possibility of the shares trading below the offering price, they can exercise the greenshoe option.
http://www.investopedia.com/articles/optioninvestor/08/green...
Facebook's too big to fail!
That is one of the reasons lobbying is such an important game for conglomerates. Once you're on top, regulation is your friend; it's much cheaper to hire paper-pushers to fill out forms and submit them to the feds than it is to actively respond to and dismantle competitors. If only MySpace had gotten something like this in place a little sooner, FB would have been destroyed and MS would still be on top.
[1] http://finance.yahoo.com/echarts?s=FB+Interactive#symbol=fb;...;
A possible reason why it reached 38 in the first place: http://www.businessinsider.com/why-facebooks-ipo-pop-fizzled...