The stock is changing hands at $31.62, up $1.61.
Morgan Stanley, with Facebook egg all over its face, has adopted the strategy memorably advocated by Senator George Aiken in 1966: Declare victory, and get out.
Senator Aiken’s proposal concerned the Vietnam war. It was not followed by President Lyndon Johnson. The war escalated for several years, until the United States finally withdrew while claiming it was not losing.
Monday’s Wall Street Journal reports that Morgan Stanley, the lead underwriter for Facebook, “says it did its job for its clients, and that the fact that the stock traded above the $38 offering price on the first day meant that the deal was priced well.”
“The price and size of the transaction were consistent with the institutional order book of demand as indicated to the lead underwriters, and confirmed by the trading of the stock prior to the impact of the Nasdaq trading issues,” said a spokeswoman.Nasdaq did completely mess up the first day’s trading, but that does not explain why Facebook shares fell after the first day and since have not gotten anywhere close to the $38 price.
The Journal adds, “In an internal webcast 11 days after the offering, Morgan Stanley Chief Executive James Gorman told employees that Facebook Chief Operating Officer Sheryl Sandberg had called him after the offering and praised Morgan Stanley’s work on the deal, say people who heard the webcast.”
I can understand why Facebook executives might like Morgan Stanley’s performance. Let’s say, for argument’s sake, that $30 would have been a more reasonable price, at least in terms of leaving the initial investors feeling as if they had not been ripped off. That $8 a share would have reduced the company’s take by about $1.4 billion and cost the selling shareholders — a group that does not include Ms. Sandberg — about $1.9 billion. Nearly a billion of that would have come directly from the chief executive, Mark Zuckerberg....MORE