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The Facebook Maginot Histogram - Here Is How Morgan Stanley Just Gave Up

Tyler Durden's picture


Update: well, our feeling was correct:


It is by now well-known that certain large banks were heavy defenders (by mandate and then by sheer panic) of the Facebook share price post-IPO. Margin Stanley appears to have been the name of choice for this defender, and by dint of primary greenshoe allocation, and today's price action suggests that whether it was them or not - whoever it was just gave up their undying defense. The following volume profile (how many shares were traded at each price point since the share's release) illustrates dramatically the massive bid-side presence (remember there are no short-sellers per se) as they defended first $42 (78mm shares bid), $41 (11.6mm shares bid), $40 (18.4mm shares), $39 (3.9mm shares), $38.50 (6.5mm shares), and finally $38 (22.7mm shares bid) before the first day or two were over. This is at least 140mm shares that were bid for above the volume-weighted average price of $37.98 across all 844mm trades that have occurred since Facebook began trading on NASDAQ. $32.1bn of trading volume across the three days. It appears that today's action - which seemed to be left undefended as algos were in charge was the breaking point for MS.

Think of the green arrow (oval) as the pivot on the teeter-totter of volume - which is now volume-weighted at almost perfectly the IPO price...

Next, for all the extended debate in the media and the blogosphere of the simple concept of a Greenshoe it becomes painfully clear that virtually nobody in the financial media space has even opened one chapter of a Series 7 book (and certainly not done a refresher course). No matter: the math is simple: if MS was the bid at or above $38 on a VWAP basis, and as the chart above shows they clearly were, they lost money using a reference synthetic "short" basis of $38, if they defended more than 15% of the float, i.e. bought more than 15% of the 484mm shares issued.

For all those who are naively assuming that just because the stock price has plunged, that MS can make money because it had a parallel short as it was IPOing: wrong. MS does not have a right to pocket the upside, and merely the cash proceeds to the company are less. As to whether and how much pain MS has taken, we will have to wait until the June 30 press release, or some ad hoc JPM-esque press conference.

Finally, our first tweet today was the following. We hope some enterprising lawyer will not disappoint us:

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Tue, 05/22/2012 - 17:00 | 2452760 Temporalist
Temporalist's picture

Ahh the French rallying cry "We surrender!"

Tue, 05/22/2012 - 17:02 | 2452765 Ethics Gradient
Ethics Gradient's picture

Apropos of nothing, who would win in a fight: Italy or France?

Tue, 05/22/2012 - 17:04 | 2452781 Temporalist
Temporalist's picture

The Irish

Tue, 05/22/2012 - 17:09 | 2452803 css1971
css1971's picture

ITYM the Swiss.

Tue, 05/22/2012 - 17:12 | 2452814 francis_sawyer
francis_sawyer's picture

The Rothschilds

Tue, 05/22/2012 - 17:24 | 2452878 Pladizow
Pladizow's picture

Facebook, faceplants!

Tue, 05/22/2012 - 18:03 | 2452976 Mugatu
Mugatu's picture


Payback is a bitch Zuckerberg!  Now FaceCrook carries a bad name on Wall Street.

Tue, 05/22/2012 - 18:11 | 2452985 The Big Ching-aso
The Big Ching-aso's picture



I bet California's pissed they didn't get inside info on this deal so they could balance their budget screwing people.

Wed, 05/23/2012 - 04:35 | 2454171 Harlequin001
Harlequin001's picture


'Apropos of nothing, who would win in a fight: Italy or France?'

I guess they'd both end up on each others side wouldn't they?


Wed, 05/23/2012 - 05:02 | 2454184 Popo
Popo's picture

Who exactly are all these muppet investors that still "invest" in equities?   The whole sordid tale of Facebook deciding to IPO when it became clear to everyone in the industry that revenues had peaked.   Then the FaceBook insiders bailing out,  the massive road-show to sucker muppets in,   the massive last-minute increase in the IPO price,  the almost-funny CNBC hype-machine spinning into overdrive,  the hiding of material analyst info at the last minute.... it's all such an obvious story of "screw the investor".   

It would be one thing if this story were unusual, or even occasional.   But this story is 100% par for the course.   It's *the* game:   Swap sucker money for insider money.   Lather.  Rinse. Repeat.

And somehow, miraculously, incredibly -- there are still muppets eager to hand Wall Street suits their money.    

And the even more humorous anecdote to the whole story is:  These same poor muppets also think that a lawsuit is going to get their money back from the biggest, most powerul cartel in history.    Good luck with that.

The only way to win is not to play.   If you have money in the market -- even in your IRA.   Get it the fuck out, and get it out now.   This is a casino.   The rule of any casino is: Don't play,  and if you do play quit as soon as you're ahead because eventually you're guaranteed to lose.


Wed, 05/23/2012 - 05:03 | 2454187 Harlequin001
Harlequin001's picture

Why do I have no sympathy whatsoever for these people?

Tue, 05/22/2012 - 19:44 | 2453306 Buck Johnson
Buck Johnson's picture

Payback is a B, and he's getting it in spades.  This guy thought he had the perfect scam and it didn't work, not at all.  Nobody wants this stock and with all the lawsuits coming into being, people want out.  Especially if yo bought it at 41 dollars a share and it's now worth 30 dollars a share.

Wed, 05/23/2012 - 00:20 | 2453941 boogerbently
boogerbently's picture


It's NOT MS, or NASDAQ....

FB HAS no business ! Why ANYONE bought is a mystery to me.

This will go down as the GREATEST sales job in history.

Just before lapsing into obscurity, a 30 year old kid cons seasoned market professionals into buying his "dead" company, so he can pay back his original investors.

What are people going to "sue" about?

Being STUPID ???

Tue, 05/22/2012 - 23:21 | 2453835 Common_Cents22
Common_Cents22's picture


Tue, 05/22/2012 - 18:12 | 2453007 Doña K
Doña K's picture


Tue, 05/22/2012 - 17:25 | 2452879 Ethics Gradient
Ethics Gradient's picture

Do they make white flags as well then?

Tue, 05/22/2012 - 17:17 | 2452843 Temporalist
Temporalist's picture

No I meant the Irish.  They're called the "Fighting Irish" for a reason.

Tue, 05/22/2012 - 21:06 | 2453543 hedgeless_horseman
hedgeless_horseman's picture



Newsflash:  The Irish haven't fought since Gerry Adams sold the Army Counsel down the river, and they sure are missing out on an opportunity.

Tue, 05/22/2012 - 17:05 | 2452786 Waffen
Waffen's picture

Well its been done, but it took a Corsican to beat the Italians.

Tue, 05/22/2012 - 17:14 | 2452825 Temporalist
Temporalist's picture

MS takes the Corsican's stance on FB:


Tue, 05/22/2012 - 17:11 | 2452809 DosZap
DosZap's picture

Ethics Gradient

OT, but its been bugging me.Your avatar,is that a rotary housing off a RX7?.

Tue, 05/22/2012 - 17:13 | 2452817 francis_sawyer
francis_sawyer's picture

It's Max Fischer's cock ring... (seen through an electron microscope)...

Tue, 05/22/2012 - 18:55 | 2453147 resurger
resurger's picture


Tue, 05/22/2012 - 17:13 | 2452824 Mr. Fix
Mr. Fix's picture

It's a RX7 rotor.

Tue, 05/22/2012 - 17:27 | 2452884 Ethics Gradient
Ethics Gradient's picture

Yup. I'm a complete wankel.

Tue, 05/22/2012 - 17:21 | 2452844 Manthong
Tue, 05/22/2012 - 18:06 | 2452982 gdogus erectus
gdogus erectus's picture

Because an avatar of a piston, rings, wrist pin and clips, connecting rod, rod berrings, cap and cap bolts wouldn't fit in such a small space.

Tue, 05/22/2012 - 17:20 | 2452858 stocktivity
stocktivity's picture

You serious?  Italians would kick the French asses.

Tue, 05/22/2012 - 19:58 | 2453355 EclecticParrot
EclecticParrot's picture

In theory, you're quite correct, we Italians could make quick work of the Frenchies.  However, it's very hard to kick something that immediately runs in the opposite direction. 

In accordance with our nature, we'd simply shrug, crack open a few bottles of their wine (something earthy and approachable, like a Southern Rhone or Languedoc, rather than Bordeaux or Burgundy), listen to old Francoise Hardy sides from 1965, and wait for the stuck-up fuckers to come back --  and if they didn't, we'd take advantage of a Robert Bresson or Claude Saute retrospective at the Cinematheque, fight off their women (as our wives would kill us) then  slowly return home, stealing every caper bush and mushroom in site.

Tue, 05/22/2012 - 21:01 | 2453522 Axenolith
Axenolith's picture

fight off their women (as our mothers would kill us)

There, that fixes that.  We know most of you guys never marry because there isn't enough saintly women in Italy to satisfy the Italian Mother... :-)

Wed, 05/23/2012 - 04:44 | 2454178 Harlequin001
Harlequin001's picture

It would be a close run thing as to who would surrender first I think.

Technically only one of you can, and then you're both on the same team, so to speak...

I think war between France and Italy would last for about a nanosecond, and then everywhere gets overcrowded as we break for lunch...

Tue, 05/22/2012 - 17:49 | 2452938 AbelCatalyst
AbelCatalyst's picture

MS got zucker-punched just like those Harvard boys, who's idea he stole... This guy is pathetic...

Tue, 05/22/2012 - 20:22 | 2453431 Drachma
Drachma's picture

Completely ShitFaced when they Booked that Fucker.

Tue, 05/22/2012 - 18:01 | 2452970 Gene8696
Gene8696's picture

The Germans .. natürlich!

Tue, 05/22/2012 - 17:29 | 2452887 whatsinaname
whatsinaname's picture

Is MS the next MFS ?

Just take the F out of MFS ..

Tue, 05/22/2012 - 17:02 | 2452764 bdc63
bdc63's picture

CNBC is reporting that the Facebook class action suits have been ... "Lawyers, Guns and Money" baby!

Tue, 05/22/2012 - 17:40 | 2452920 EscapeKey
EscapeKey's picture

Also in the news;



Facebook's Zuckerberg sells 30.2 mln shares

Zuckerberg suckerpunches investors.

Tue, 05/22/2012 - 17:46 | 2452933 walküre
walküre's picture

Made himself a cool billion. Director Thiel sold 16.8 mln shares. Who else?

The company doesn't need any money. This was a setup to transfer wealth from muppets to geeks. The big guys have Zuck's home address.

Tue, 05/22/2012 - 17:53 | 2452952 bdc63
bdc63's picture

wow.  lots of confidence in your mobile strategy, hey Zuck?

Tue, 05/22/2012 - 18:01 | 2452965 EscapeKey
EscapeKey's picture

If the SEC weren't so busy furiously masturbating to online porn, this should be investigated as it's borderline criminal at best.



The analysts cut their estimates because a Facebook executive told them to, a source tells us.

The information about the estimate cut was then verbally conveyed to sophisticated institutional investors who were considering buying Facebook stock, but not to smaller investors.

At worst, it's a violation of securities laws.
Yeah, the only thing about that is... who writes the laws again?


Tue, 05/22/2012 - 18:15 | 2453020 ebworthen
ebworthen's picture

SEC will be sending in the Keystone Cops and some Circus Clowns to get to the bottom of this!

Tue, 05/22/2012 - 21:19 | 2453582 samwell
samwell's picture

fuck zuck

Tue, 05/22/2012 - 18:07 | 2452986 Gene8696
Gene8696's picture

I think he screwed the system... Hat's off. Sell as much as you can at the highest price on day one. Go on honeymoon with Yoko Ono. Buy gold.

Tue, 05/22/2012 - 17:03 | 2452776 williambanzai7
williambanzai7's picture

FACE BOOK VLHC (Very Large Hopium Carrier)

Tue, 05/22/2012 - 17:13 | 2452815 malikai
malikai's picture

I knew I smelled gas when I heard about the IPO. I thought it was just that hoagie I had last night.

Tue, 05/22/2012 - 17:22 | 2452872 EscapeKey
EscapeKey's picture

That's hopium? I always pictured huge plantations in Afghanistan.

Tue, 05/22/2012 - 17:34 | 2452890 williambanzai7
williambanzai7's picture

First they vaporize it.


Facebook was loaded with gas
To lure in the lemmings en masse
The hopium high
Led sheeple to buy
When will Kleptocracy pass?

The Limerick King

Tue, 05/22/2012 - 18:24 | 2453060 jus_lite_reading
jus_lite_reading's picture

The ponzi starts to catch up, 

With the Wall Street hustlers cup,

So many sheep they shear, 

Which they now will have to fear.

With heads a rollin, 

We gots to get boilin'...


Tue, 05/22/2012 - 19:15 | 2453214 SqueekyFromm
SqueekyFromm's picture

OH, I can do Irish Poems:

Mark Zuckerburg picked a real blighter

To be the Facebook underwriter.

Alas!, Morgan Stanley,

To cry isn't manly!

And defenestration's politer.


Squeeky Fromm, Girl Reporter


(PS: Defenestration is a really fun word!!!)


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