UPDATE: Now we know that apparently “The analysts cut their estimates because a Facebook executive who knew the business was weak told them to.” See: Here’s The Inside Story Of What Happened On The Facebook IPO
5/22/2012 – Facebook’s Zuckerberg, Thiel sell shares
5/24/2012 – Facebook, Morgan Stanley, and “Dumb Money”
Original post:
From Business Insider:
And now comes some news about the Facebook IPO that buyers deserve to be outraged about.
Reuters Alistair Barr is reporting that Facebook’s lead underwriters Morgan Stanley, JP Morgan, and Goldman Sachs, all cut their earnings forecasts for the company in the middle of the IPO roadshow.
And why should we care?
News of the estimate cut was passed on only to a handful of big investor clients, not everyone else who was considering an investment in Facebook.
Yea, not cool. This type of asymmetric information is a primary reason we started SprinkleBit. It’s simply not fair that institutional investors should get to cut in line ahead of retail investors. If this information was only passed on to some clients, it should have been passed on to everyone. Period.
