Tuesday, May 22, 2012

Another Reason Not To Believe Wall Street's Hype On Individual Stocks ...

Trading Day 3 - Some might say the share price of FaceBook looks like a "falling knife."  Indeed, this may be a picture of what greed gets you ...

Offering Share Price = $38

Down 18+ percent in two days is embarrassing on an initial public offering this big.  Too many shares were offered at too high a price with trading platform gliches to boot -- but Mark Zuckerberg is still laughing all the way to the bank.

Don't try to catch this falling knife just yet.

PS (Tuesday, 2:45 p.m.) Developing Story --
"NEW YORK (MarketWatch) -- The consumer Internet analyst at Morgan Stanley, the lead underwriter for last week's Facebook Inc. IPO, trimmed his outlook for the social-networking firm's revenues just days before the deal went live, Reuters reported Tuesday. The report said that the action, which it said was relayed to some of Morgan's major clients during Facebook's pre-IPO road show, came as a surprise to many potential investors so close to the stock's debut. Reuters explained that the cut came after Facebook released an updated prospectus ahead of the share sale that cautioned about revenue-growth challenges presented by a shift to mobile devices. Citing sources familiar with the situations, analysts at fellow underwriters J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. also revised their Facebook estimates after the prospectus was updated by the company, the report stated."

Could this be a reason for such tepid institutional trading demand post-IPO?  And here we are again with the retail investor not getting the same message that the big-guys get pre-IPO.  And people wonder why "Wall Street" isn't trusted???