Quoted: on Morgan Stanley cutting Facebook revenue estimates pre-IPO

“They definitely lowered their numbers and there was some concern about that. My biggest hedge fund client told me they lowered their numbers right around mid-roadshow.”

Scott Sweet of research firm IPO Boutique, on how lead underwriter Morgan Stanley “significantly” cut its second-quarter revenue (and also its full-year) forecasts for Facebook during the Silicon Valley company’s IPO road show, according to Reuters. Other underwriters also reportedly lowered their forecasts after Facebook’s SEC filing May 9, which warned that users’ increasing use of mobile devices to access the world’s largest social network could affect its revenue growth. Some analysts and investors called the moves by the underwriters “shocking” and “unusual,” the Reuters report says. Facebook shares, which opened at $38 during their first day of trading Friday, fell 11 percent Monday — starting the finger-pointing and the blame game, with Morgan Stanley being one popular target, according to the New York Times — and continue to sink Tuesday. They’re down about 5 percent to $32.50 as of this post. As some analysts told the Mercury News that too many Facebook shares were sold, or were overpriced, others point out that companies with high-flying stock, such as Amazon.com and Apple, have had their down days on the stock markets, too. That’s something Mercury News columnist Chris O’Brien agrees with: “If we want companies and the economy to focus on the long-term, then so should we.”

 

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