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Technology Stocks : Meta Platforms, Inc. (Facebook) -- Ignore unavailable to you. Want to Upgrade?

To: zax who wrote (510)	5/18/2012 9:35:39 PM
From: Sr K	1 Recommendation Respond to of 3790

The wsj got it wrong. Morgan Stanley, which led the platoon of 11 Wall Street banks that arranged the listing, had to dip into an emergency reserve of around 63 million Facebook shares—worth more than $2.3 billion at the offer price—to boost the price and create a floor around $38 a share, according to people close to the situation. In successful IPOs, the reserve, known as the "overallotment" or "green shoe," is used by underwriters to meet soaring demand but in this case, it was used to prop up Facebook's ailing share price. They couldn't "dip into an emergency reserve of around 63 million Facebook shares". The overallotment shares are almost always precisely 15% of the initial offering. But in this case the 15% came from different selling shareholders, but still equaled the 15%. They get the $.41 fees so they still make that (on the extra 63 million shares) if they keep the price at 38 or higher. But prices sometimes break. I think it happened to Vonage. They may have had "commitments" from customers to buy in the after-market, and all they need are a bunch of them to buy 50% more than they were allocated. Many customers consider breaking even on an IPO not so bad, because it would likely get them a better allocation for multiple other IPOs.