>A research analyst at Morgan Stanley cut his revenue forecast on FB close to their IPO. Following that, FB amended their S-1 to lower revenue forecasts. The latter may have been informed by the former but it cannot be said that the former was influenced by the latter without more information.
It was the opposite. Facebook filed the amended S-1, and Morgan Stanley, JPMorgan Chase, and Goldman Sachs changed their forecast.
From the Reuters article:
>The change in Morgan Stanley's estimates came on the heels of Facebook's filing of an amended prospectus with the U.S. Securities and Exchange Commission (SEC), in which the company expressed caution about revenue growth due to a rapid shift by users to mobile devices. Mobile advertising to date is less lucrative than advertising on a desktop.
So Facebook expressed caution about revenue growth, and the banks downgraded their earnings forecast?
I really don't see what the story is here!
In fact the WSJ suggests that if they had released these revised earnings forecasts publicly, they'd have been breaking SEC regulations:
Underwriters are barred by Securities and Exchange Commission rules from publicly issuing research on the IPOs they are involved in. But analysts are allowed to discuss their views with clients during these so-called road shows.
AFAIK, in the US, this doesn't prevent the Broker Dealer arms of the bank from publishing reports for an IPO underwritten by the Investment Banking arm of the bank. I know it doesn't in Brazil. There should be a Chinese Wall between the IB and the Broker Dealer and no meeting should happen between analysts from both arms without the presence of compliance. However, this is often not observed and difficult to enforce since members of both banking arms are often friends and socialize together.
It was the opposite. Facebook filed the amended S-1, and Morgan Stanley, JPMorgan Chase, and Goldman Sachs changed their forecast.
From the Reuters article:
>The change in Morgan Stanley's estimates came on the heels of Facebook's filing of an amended prospectus with the U.S. Securities and Exchange Commission (SEC), in which the company expressed caution about revenue growth due to a rapid shift by users to mobile devices. Mobile advertising to date is less lucrative than advertising on a desktop.