On May 11, Bloomberg reported that demand for Facebook's stock among institutional investors was much lower than expected. But on the same day, Reuters had a conflicting report: Facebook was already oversubscribed, and one large unnamed institutional investor was calling around syndicate desks trying to get more shares. While retail investors clamored for Facebook shares, some large investors were planning a massive short -- essentially betting against the stock's buyers.
Scott Sweet, senior managing partner of Tampa-based research firm IPO Boutique, received calls from hedge fund clients saying they heard from research analysts at underwriting banks that Facebook's mobile trend was behind its lowered earnings estimates. One multi-billion dollar hedge fund client told Sweet that he planned to short the stock as a result.
Sweet didn't name the investor due to a confidentiality agreement he has with clients. A day later, they increased supply to more than million shares. Back in her home, Swaminathan didn't know about the reduced revenue estimates or about the vast number of hedge funds that were planning to short Facebook. After the opening bell ceremony neared its end at a. Minutes later, Swaminathan, eager for the stock to open, called her son, who lives in New York City, to inform him about the 5, shares she had ordered.
Her son, who studied finance at UC Berkeley, was livid. Cancel it! At a. In all the times she had seen IPOs on television, Swaminathan had never witnessed a market delay on the opening day. Something is wrong, she thought. She turned her attention to her computer screen only to realize that there was no sign of her having voided the order.
She kept refreshing the page in hopes of seeing the notification. When no cancellation report appeared, she called her stockbroker at Vanguard. If the cancel order was placed, then it's probably cancelled, the broker told her. She got off the phone and went back to her computer screen. There was no sign of cancellation. She called Vanguard again. This time, she says, she waited on the line for a long time, but no one came to take her call.
Meanwhile, Facebook stock opened at a. The mysterious delay was due to technical glitches. In the first 30 seconds, around 82 million shares were exchanged. Facebook did not experience the anticipated pop. At p. Later that day, the Wall Street Journal reported that Morgan Stanley had stepped in to stabilize the stock, using what is referred to in finance as a "greenshoe option" -- a common stipulation in the IPO agreement that lets underwriting banks sell more shares to investors than they are allotted.
The mechanism lets banks buy back the shares at the offering price, in case the company's stock price needs a little help on the first day. The buying action puts upward pressure on the stock. Her son came to New Jersey to stay with her over the weekend. For two days, they quarreled. He wanted to know why she put so much money into one stock, and she couldn't give him a satisfying answer.
On Monday morning, she called Vanguard. Her son advised her to hold onto her shares until she either resolved the matter with Vanguard or the price bounced back. The next couple days were a blur. Swaminathan approached Vanguard again, asking why the cancel order wasn't processed. She could have sold the shares before the price plummeted, she said to the broker, asking to speak with a supervisor.
The additional shares will be sold by selling shareholders of the company, not by the company itself, which will stick with previous plans to sell million shares.
After the offering, he will hold But Zuckerberg also holds the voting rights for In addition, some early investors in Facebook are increasing the number of shares they're offering. James Breyer of Accel Partners, the largest shareholder outside of Zuckerberg, is upping how much of his stake he's selling by He now plans to sell 49 million shares, or about a quarter of his Facebook holdings.
Facebook has been reporting strong demand for its shares. The final pricing is expected after the market close Thursday, with shares due to begin trading Friday morning. Select personalised content. Create a personalised content profile. Measure ad performance.
Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. The most popular social networking company had one of the largest and most anticipated IPOs in history. With all of the hype surrounding the social media giant's IPO, expectations were sky-high. Almost immediately it became apparent that the results were going to be lower than expected.
Facebook's shares did not staircase higher for a period of time. Though the tech giant's IPO got off to a rocky start, the company turned the tide and has seen significant growth in the years since. With strategic acquisitions, such as Instagram and WhatsApp, Meta will continue to be a dominant player in the tech and social media industries, with a stock price that is expected to continue growing. Jul 13, , pm EDT. Kenrick Cai Forbes Staff. Venture Capital.
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