> We know that Morgan Stanley propped up Facebook's share price to keep it from falling below $38.
Why exactly do they wanna do that? If they're artificially holding it up, doesn't that mean they'll lose a lot of money in the next weeks when it goes back to an non-artificial price?
"Buyers did not rush into the market to snap up shares of the social networker. And the big Wall Street banks that brought Facebook public scrambled to prevent the stock from collapsing into declines."
"The underwriters averted a potential debacle by scooping up shares of the company during the Nasdaq debut. This propped up the stock, keeping it above the $38 offering price through most of the day."
“When a deal gets priced and breaks price on the first day, that’s definitely a major embarrassment," said trader Andrew Frankel, co-president of Stuart Frankel & Co.
"The practice is pretty standard during IPOs, especially high-profile ones like Facebook. The big banks buy into a wave of selling as a way to prevent their customers from suffering big losses."
Why exactly do they wanna do that? If they're artificially holding it up, doesn't that mean they'll lose a lot of money in the next weeks when it goes back to an non-artificial price?