Facebook underwriters prop up stock as it nears break-even mark

[Sefket]

SOURCE

Mark Zuckerberg is seen on the video screen at Times Square, New York. (Emmanuel Dunand/AFP/GettyImages / May 18, 2012)

By Andrew Tangel May 18, 2012, 11:58 a.m.

NEW YORK – The big pop in Facebook Inc. shares never came. Buyers did not rush into the market to snap up shares of the social networker. And the big Wall Street banks that brought Facebook public scrambled to prevent the stock from collapsing into declines. The underwriters averted a potential debacle by scooping up shares of the company during the Nasdaq debut. This propped up the stock, keeping it above the $38 offering price through most of the day. “When a deal gets priced and breaks price on the first day, that’s definitely a major embarrassment," said trader Andrew Frankel, co-president of Stuart Frankel & Co. "But it didn’t do that here – at least for the time being.” The practice is pretty standard during IPOs, especially high-profile ones like Facebook. The big banks buy into a wave of selling as a way to prevent their customers from suffering big losses. The syndicate of underwriters led by Morgan Stanley helped prop up shares after the Nasdaq Stock Market experienced technical problems processing trades. A number of brokerages reportedly said they were having problems trying to trade the stock. “There are currently industrywide delays in reporting trade executions,” Michael Cianfrocca, a spokesman for brokerage Charles Scwhab, told Bloomberg News. “These issues do not appear to be unique to Schwab.” The problems could threaten the Nasdaq’s reputation as the premier platform to list big blue-chip technology companies. The exchange won a hard-fought battle against the New York Stock Exchange for a chance to list Facebook. Spokesmen for the Nasdaq did not return several telephone calls and emails seeking comment. Many traders, Frankel said, "backed away from trading Facebook because Nasdaq had such system issues.” The stock bolted at the open to $42.05, but then quickly withered in the first hour of trading. It touched $38 several times, but eked out a small rebound and leveled off at about $40. Barry Ritholtz, head of Fusion IQ, an investment research firm, added: "It pretty much started straight down to $38, where as normally happens, the underwriters defended it."

[Arrow]

ye

[ph0ne]

[Prep Unit]

so what does this mean exactly?

[Mike (0BR)]

The shares were sold to the "syndicates" which are the bigger players in the financial games such as banks, that get first crack at the shares in the IPO. They essentially buy the stock and either hold or resell it to other brokers/the public.

I don't know what it closed at, but Facebook's actual price was well reflected in the IPO as the actual closing price didn't move a lot since the open.

Moral of the story: don't waste your time buying facebook.

[Sefket]

The shares were sold to the "syndicates" which are the bigger players in the financial games such as banks, that get first crack at the shares in the IPO. They essentially buy the stock and either hold or resell it to other brokers/the public.

I don't know what it closed at, but Facebook's actual price was well reflected in the IPO as the actual closing price didn't move a lot since the open.

Moral of the story: don't waste your time buying facebook.

The stock opened at 11:32 a.m. at $42.05, but soon dipped to $38.01. By noon, it was up again at $40.40, a 6 percent increase. It fluttered throughout the afternoon, but it never hit the double-digit jump that many Facebook-watchers had expected. By the end of the day, more than 500 million shares had changed hands

http://news.yahoo.com/facebook-falls-flat-public-debut-204058611--finance.html

[DeltaPapa]

nice man

[Sopuli]

ye ok tl;dr