/// Facebook IPO – Is the bubble over before it started?
EDIT: May 19th 11:23 AM
The Facebook IPO officially launched May 18th.
The Nasdaq delayed the opening from 11am to 11:30. I hear that the sudden influx of institutional SELL orders at the open delayed the process.
The IPO price was locked in at $38 per share. The stock’s opening price was $42. FB made a high of $45 early in the session, a low of $38 and closed at $32.23. You can find some interesting statistics on the day’s trade here.
Statistics include: 1) Volume of shares traded Friday was 580,587,742. This number set the record for first day IPO trading volume. See CNBC story here. 2) There are 635,882,000 shares outstanding. (See more below.)
I heard during the trading day that the price was being stabilized/supported at $38 by the underwriters. Turns out that was exactly the case: This article details exactly the number of shares that traded near $38 and exposes the blatant market manipulation. Embedded is an 8 minute video which explains why the underwriters (JP Morgan etc.) were forced to accumulate millions of shares of stock to support the $38 level. There were active speculators in the market SELLING the stock in major volume near $38.(If that link is password protected, try this one and click on the purple headline at top.)
See this Bloomberg article as well. Also interesting to note in the Bloomberg article: “Days before the sale, Facebook and Morgan Stanley (MS) decided to bump the offering price range to one with $36 as a midpoint to persuade the company’s backers to sell more of their stock, one of the people said. Facebook and the bankers knew pre-IPO investors were willing to sell more, though not at the initial midpoint range of $31.50 a share, the person said. Goldman Sachs Group Inc. (GS) and Accel Partners were among backers that decided to sell additional shares in the IPO.” How does this translate to you? To me, it reads that the insiders wanted to sell more stock, but demanded a higher price. The article suggests that these insiders were somehow ‘persuaded’ to sell at the higher price. As if Morgan Stanley felt there was so much demand for the stock, that they needed more shares to be available on the market. Yeah, right. There was so much demand that the bank had to BUY shares to keep the price above it’s IPO valuation. Meep. Meep.
Reporters then compare the FB opening day versus other similar IPOs. Google, LinkedIn, GM, UPS, all had huge volume, but ADVANCED on the day. Click here.
The fun continues as the Nasdaq halted shares of ZYNGA after it traded down 13.30% and triggered the single stock rule. See the official Nasdaq recount of the day’s trade here.
Click here for ZNGA chart.
Click here for FB chart.
On May 16th, Facebook released their 8th amendment to the original S-1 filing. A number of changes were made that:
- dramatically increase the risk to non-insider investors, and
- further demonstrate the greed in the hearts of the Facebook cabal.
There were CRITICAL changes from the S-1, No. 1 to the final, No. 8.
- Seventh Amendment:
“Facebook, Inc. is offering 180,000,000 shares of its Class A common stock and the selling stockholders are offering 157,415,352 shares of Class A common stock.”
Final: “Facebook, Inc. is offering 180,000,000 shares of its Class A common stock and the selling stockholders are offering 241,233,615 shares of Class A common stock.”
An increase of 83,818,263 shares. ALL offered by insiders. Not new shares, but shares already owned by Zuckerberg et al. Every dollar goes to their personal accounts, NOT Facebook’s balance sheet.
Facebook S-1, No. 1 Facebook 180,000,000 53.3% Insiders 157,415,352 46.7% Total 337,415,352 100.0% Facebook S-1, Amended, No. 8 Facebook 180,000,000 42.7% Insiders 241,233,615 57.3% Total 421,233,615 100.0% All versions: “We will not receive any proceeds from the sale of shares by the selling stockholders.” “We” being the company, not its owners.
- Seventh Amendment (page 156):
91 days after the date of this prospectus, 171,797,666 shares held by the selling stockholders other than Mr. Zuckerberg;
181 days after the date of this prospectus, 1,338,453,216 outstanding shares and approximately 18 million shares underlying other net-settled Pre-2011 RSUs;
211 days after the date of this prospectus, 141,776,569 shares held by the selling stockholders other than Mr. Zuckerberg; and
366 days after the date of this prospectus, 93,815,940 shares held by Mail.ru Group Limited and DST Global Limited and their respective affiliates.
Final version (page 156):
91 days after the date of this prospectus, 268,113,248 shares held by the selling stockholders other than Mr. Zuckerberg;
181 days after the date of this prospectus, 1,222,849,097 outstanding shares and approximately 18 million shares underlying other net-settled Pre-2011 RSUs;
211 days after the date of this prospectus, 123,746,921 shares held by the selling stockholders other than Mr. Zuckerberg; and
366 days after the date of this prospectus, 47,315,862 shares held by Mail.ru Group Limited and DST Global Limited and their respective affiliates.
Facebook S-1, No. 1 91 days 171,797,666 9.8% 181 days 1,338,453,216 76.7% 211 days 141,776,569 8.1% 366 days 93,815,940 5.4% Total
1,745,843,391 100.0% Facebook S-1, Amended, No. 8 91 days 268,113,248 16.1% 181 days 1,222,849,097 73.6% 211 days 123,746,921 7.4% 366 days 47,315,862 2.8% Total
1,662,025,128 100.0% Note the shift of shares to earlier lock-out dates. Not only did the insiders offer more of their personal shares to the market, they decreased the amount of time they are required to hold additional shares. If they believe in the company so much, why the rush to sell shares?
- All versions (p. 138 on original and p. 156 of final): “As a result of the lock-up agreements and market standoff provisions described below and subject to the provisions of Rules 144 and 701 under the Securities Act, these restricted securities will be available for sale in the public market as follows:”
If you recall from an earlier post (click here), these SEC rules basically allow insiders to sell shares before lockout date if they desire, without SEC disclosure!!
- Unusual Amount of Retail Allotted?: I hear an unusual amount of IPO shares were offered to the RETAIL INVESTOR. Brokers at Smith Barney, for example, were allotted more shares than normal to offer to their individual clients. I am searching for hard data on this. If you find some, let me know!
STAY TUNED!!!
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