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Was it really that shady? From the Reuters article, it sounds like Facebook issued the updated SEC filing during the middle of their roadshow, and the analysts

by cube13 14y ago

Was it really that shady? From the Reuters article, it sounds like Facebook issued the updated SEC filing during the middle of their roadshow, and the analysts went over it and issued new forecasts to their paying customers. Keep in mind that the underwriters are barred from making public forecasts during the lead up to an IPO. Also keep in mind that the SEC filing was public, so anyone could go and read through it. So it's not like this was inside information. It was available to be consumed.

chernevik 14y ago
Estimates of underwriters' estimates are presumed to be indicative of management opinion. That's a touch shady to begin with, ideally the analysts shouldn't have any "extra" information in the first place, right? Given that a change in those estimates is interpreted as a change in management opinion -- if that change is communicated to one set of investors, the others are disadvantaged. To me a lot of this falls within reasonable expectations of how openly subjective information can be communicated in the first place. Any communication involving judgment and ambiguity and anticipation is going to travel better and faster within some social network, and that's going to advantage some over others. I don't think the advantages are insurmountable, crowds are often wrong and anyone good at this stuff can find their way in. But I definitely see why other people find the whole thing fishy.
- cube13 14y ago
  The facts were public. The analysis was not. Here's the information that the analysts were working off of: http://www.sec.gov/Archives/edgar/data/1326801/000119312512222368/d287954ds1a.htm http://www.sec.gov/Archives/edgar/data/1326801/0001193125122... The facts were that Facebook had less profit for Q1 2012 than Q1 2011, despite making 25% more revenue. It was blamed on lack of new revenue from the mobile space. The "disadvantage" is to people who were blindly buying Facebook without doing due diligence.
  - chernevik 14y ago
    I'd be very surprised if the analysts didn't have sit-down meetings with FB staff and management.
  - thereason 14y ago
    How many investors do you think were reading every amendment to the S-1 up to May 9? Not even considering how many did not read the S-1 to begin with. The use of the Greenshoe tactic to make the price appear stable also seems to suggest they were targeting naive investors who would only be watching the share price after trading began, having no regard for who was buying them. Please tell me I'm wrong. As for Henry Blodget, while he may be biased in favor of sensationalism to garner pageviews, he seems to be in a unique position to comment on this sort of maneuvering to manipulate naive "web investors". He was once in the center of it, during the first Bubble. We cannot say the same for the WSJ's writers. Please tell me I'm wrong.
    - Drbble 14y ago
      An investor who didn't read the s-1 was just wandering through a casino pulling slot machines without even reading the payout disclosures. There is right reason such an investor should profit. If that investor runs a fund for your capital, he should be fired.

by cube13 14y ago

chernevik 14y ago

Estimates of underwriters' estimates are presumed to be indicative of management opinion. That's a touch shady to begin with, ideally the analysts shouldn't have any "extra" information in the first place, right? Given that a change in those estimates is interpreted as a change in management opinion -- if that change is communicated to one set of investors, the others are disadvantaged. To me a lot of this falls within reasonable expectations of how openly subjective information can be communicated in the first place. Any communication involving judgment and ambiguity and anticipation is going to travel better and faster within some social network, and that's going to advantage some over others. I don't think the advantages are insurmountable, crowds are often wrong and anyone good at this stuff can find their way in. But I definitely see why other people find the whole thing fishy.

cube13 14y ago
The facts were public. The analysis was not. Here's the information that the analysts were working off of: http://www.sec.gov/Archives/edgar/data/1326801/000119312512222368/d287954ds1a.htm http://www.sec.gov/Archives/edgar/data/1326801/0001193125122... The facts were that Facebook had less profit for Q1 2012 than Q1 2011, despite making 25% more revenue. It was blamed on lack of new revenue from the mobile space. The "disadvantage" is to people who were blindly buying Facebook without doing due diligence.
- chernevik 14y ago
  I'd be very surprised if the analysts didn't have sit-down meetings with FB staff and management.
- thereason 14y ago
  How many investors do you think were reading every amendment to the S-1 up to May 9? Not even considering how many did not read the S-1 to begin with. The use of the Greenshoe tactic to make the price appear stable also seems to suggest they were targeting naive investors who would only be watching the share price after trading began, having no regard for who was buying them. Please tell me I'm wrong. As for Henry Blodget, while he may be biased in favor of sensationalism to garner pageviews, he seems to be in a unique position to comment on this sort of maneuvering to manipulate naive "web investors". He was once in the center of it, during the first Bubble. We cannot say the same for the WSJ's writers. Please tell me I'm wrong.
  - Drbble 14y ago
    An investor who didn't read the s-1 was just wandering through a casino pulling slot machines without even reading the payout disclosures. There is right reason such an investor should profit. If that investor runs a fund for your capital, he should be fired.