FacebookBy Marek Fuchs, TheStreet

NEW YORK -- Chatter about Facebook's (FB) initial public offering has made a hairpin turn, from celebrating the riches at hand to hand-wringing post-mortems on what went wrong, where and why.

After all the finger pointing and blame, there is one factor that should have served as a symptom of trouble, a certain signal that at least in this larval stage of Facebook's life as a public company, there would be regret, recrimination and loss.

Morgan Stanley (MS), the lead underwriter, cut earnings estimates in the lead-up to the offering. That is rare enough. But they did it while expanding the size of the offering and raising its price.

Curiously, most post-mortems -- including a New York Times (NYT) story titled "As Facebook's Stock Struggles, Fingers Start Pointing," mention these factors, but only as an afterthought and not specifically enough.

Reuters did well to hold their nose at the confluence of events:

"The lower revenue projection came shortly before the IPO was priced at $38 a share, the high end of an already upwardly revised projected range of $34-$38, and before Facebook increased the number of shares being sold by 25 percent."

Remember for any future offering that this is a big, flapping red flag.

As always, though, when it comes to post-mortems on events that took place only last week, perspective is in order. The Times did well to end on a fitting note in this regard, by pointing to the problematic Amazon (AMZN) offering:

"Still, the final story for Facebook's stock has yet to be written. Amazon.com quickly tumbled after making its public market debut in May 1997, trading well below its offer price of $18 a share for several months. A year after the I.P.O., Amazon had roughly quadrupled, and on Monday the shares closed at $218.11."

That doesn't mean that Amazon's history will necessarily repeat itself, but it might. If an underwriter, though, cuts numbers as it's raising the price of the offering and allotment: watch out. That history, in all probability, will repeat.


At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.


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