Fidelity Investments, Capital Research among those warned ahead of time
(NEWSER) - New investors in Facebook may be steamed (and suing ) that their hot property has lost 16% of its value since the IPO Friday, but Facebook's underwriters are sitting pretty. Morgan Stanley and the other underwriters have made an estimated $100 million from stabilizing the buffeted stock, in addition to their regular IPO fees, reports the Wall Street Journal . Underwriters typically oversell an IPO by 15% in order to help them stabilize the price—they reportedly bought up some of those extra shares twice on Friday to prevent the shares turning into a loss. But on Monday, the Facebook share price fell below the IPO opening value, allowing the underwriters to buy shares at the new, lower price and pocket the difference, which worked out to about $100 million. More»
