(Bloomberg) – Morgan Stanley had the largest US original public offer over the last five years. Now it's going to fill the second guess after Uber Technologies Inc. has tumbled 18% in the first two days of trading.
"In retrospect, underwriters should have done a better job to find out how strong the real demand was," said Jay Ritter, a professor at the University of Florida Warrington College of Business specializing in IPOs. "But underwriters generally have it difficult to figure out how much buy-and-hold demand it is, unlike flippers. "
The debate on how well Morgan Stanley and other banks handled the pitch offer is complicated by many bad luckily, including the sudden follow-up last week in trade negotiations between the United States and China that ran markets across the globe, as well as the sinister construction of Uber's biggest rival, Lyft Inc .. There is also a broad rodent concern for Silicon Valley's love of delaying public listings before launching full size: Who is again to buy?
Many first-class investors already owned shares in Uber before last week, potentially slowing down is a little appetite for the $ 8.1 billion sold. Proprietors included clients in Morgan Stanley's wealth management division, such as family offices that had opportunities to purchase in private, a person familiar with the matter said. Even someone in Uber's leadership began to see the round more as a "successor" investment than a new public offering, two people said.
Nevertheless, people with knowledge of the situation have said that the order book was at least three times
A spokeswoman for Morgan Stanley refused to comment on this story.
An investor in a multibillion-dollar store remembered other abuses that went into the sale.
He said he grew suspicious days before pricing because the syndicate of banks continued to seek assurances that the firm would not reverse the warehouse. Nevertheless, the bankers also kept telegraphing. There were big retailers hoping to buy in after the debut, which could cause the price to pop at least short, giving a chance for quick and easy profits, investor said. His company ended up slashing his final order.
The stock climbed 1.5 percent to $ 37.65 at 4:25. New York time in US pre-trading. The shares fell 7.6% in their trading debit on Friday and lost another 11% on Monday.
Morgan Stanley has tried to smooth Uber's price, according to people who are informed of their efforts. As a leading guarantee force and stabilization agent, Morgan Stanley has the right to sell extra shares via a so-called greenshoe option. Generally, the banks can either get these shares from sellers in the listing, or by snatching them up in the open market, which helps support the price when it starts to trade. It is unclear to what extent Morgan Stanley has done so.
At least one of Uber's biggest investors, now in the red and speaking under anonymity, expressed frustration, suggesting that the bank should have given up the price more from the start. Nevertheless, it could have left the investment bank with less firepower to support the warehouse if it were to keep slipping in the days that followed.
Morgan Stanley has built a reputation for breaking megawatt technology IPOs from major rivals, including Goldman Sachs Group Inc., which was listed on Uber's offer documents. Some annoy credit – and other showmanship – by Michael Grimes, Michael Bank, and Michael Grimes, equity markets, Colin Stewart. Both are veterans in the industry who can assure clients we have been here before.
Uber, perhaps the player whose opinion matters most, has not called the bank. In a letter to employees, CEO Dara Khosrowshahi owed the poor market opening: "Clearly, our stock was not trading as we had hoped for after IPO. Today, there is another tough day in the market and I expect the same as Regarding our warehouse. "
Uber's $ 45 share price in the IPO gave the company a value of $ 75.5 billion. The shares were closed at $ 37.10 on Monday. A $ 120 billion valuation will help Khosrowshahi and other executives unlock equity prices.
It is possible that the early trading travails do not last. Morgan Stanley has handled some of the most famous and infamous technical IPOs of all time – such as Facebook Inc. – who first fell out before coming up as once in generations.
Uber looks like "kind of what happened after Facebook," said David Erickson, financial professor at the University of Pennsylvania Wharton School. "The balloon was deflated on the first day."
(Adding market share in tenth paragraph.)
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