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Gary Kaltbaum of Kaltbaum Capital Markets explains how Morgan Stanley priced Facebook's IPO too high.
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I don't blame the banks Gary cult about home.
Says it won't be responsible for FaceBook to disappoint stock offering performance Eric -- -- president.
Of cal bound capital markets Gary let's think about this mortgage delegate -- -- number shares are gonna put on the market 25%.
They raise the price 8% last minute even as -- Morgan Stanley analyst reduces revenue forecast first give us a grade.
For Morgan Stanley performance.
F plus look the bottom line here is they they did everything.
Won't.
Anything you can do wrong they did they raise the price they raise the offering.
Numbers were forty coming down they knew it and I think just what happened -- -- they overreached.
And they're paying a penalty not only in dollars.
But our credibility going forward and this'll probably heard all the right POs as we move forward in this space.
-- -- let me try the other side -- trade Gary because.
You know Morgan Stanley's clients are not the buyers of FaceBook stock Morgan Stanley's -- was FaceBook they raised sixteen billion dollars while the highest ever.
They got FaceBook the highest valuation ever for -- -- suggest going public -- Morgan Stanley served FaceBook well.
Well you have to remember if you go public its then in the investing public's hands and that's what you have to take care of also so yes I don't blame companies -- -- -- that people wanting to get the best price.
Put it past the be reasonable and I have new -- -- -- it's still trading at a 73 billion dollar market cap even here.
This is -- company with less than four billion in revenues and it and the multiple to earnings are still way out there.
So I think it's probably gonna still go lower.
And no matter what it's how things look.
That mean everything and you see what's happening on a daily basis all all the news and all the noise and all the bad news on this this is a real big black guy not just from Morgan Stanley.
But Wall Street as a whole.
Yeah snapped up let's talk about ADD and the impatient investor.
I get the feeling that -- how rushing to judgment here and we're still outraged on the third day of FaceBook trading.
We're not thinking about the longer term which is this company got 900 million people -- it's going to be able to sell -- stuff.
Look everybody cares about their wallets today.
And if they can leverage that 900 million people make and make 1020 billion dollars a year off of 300 billion in revenues.
This stock is gonna go much much higher.
But that is a guess at this point in time nobody knows and they are or some issues out there.
-- -- just give you a couple of numbers that Dennis the last three quarters their earnings were up 83%.
17%.
Last quarter was down 9%.
So there's initial whether there -- mature company going -- if they are.
Don't expect much out of the spot so hopefully they can leverage -- I looked to be an exciting -- a company like this but they have to be growing their business very strong -- -- -- grow into these numbers.
A last quick question Gary rather than blaming Morgan Stanley blame the banks -- we should blame greedy investors look at hedge funds Wall Street Journal reporting today that.
They ordered twice as much FaceBook stock as actually ever expected to get.
Because they thought -- be shut out and then -- end up with more than they want and they dumped on the market that's that the price -- they got greedy.
Dennis I don't -- -- -- I have been preaching for years that the investors.
Read the fine print do your homework don't blame mothers.
You know -- this news was already out there the news about mobile -- -- to build their possible leverage going boat without their.
The numbers coming down was already out -- -- to blamed everybody else but yourself I agree with you on that stance.
All right thank you Gary K.
Blame everyone guys it's all your fault out there but they'll come -- thank.
