Morgan Stanley and other underwriters have made a profit of about $100 million stabilizing Facebook stock since trading began on Friday, the Wall Street Journal said, citing people familiar with the matter.
Facebook's listing, envisioned as a crowning moment for an eight-year-old company that has become a business and cultural phenomenon, has instead turned into a legal and public relations fiasco for the company and its lead underwriter, Morgan Stanley.
As a lead underwriter, Morgan Stanley would receive the largest chunk of those profits arising from stabilizing Facebook's stock price, the people told the Journal. These profits come on top of millions of dollars of IPO fees, according to the newspaper.
The underwriters made the bulk of the profit in Monday's trading when they bought shares below the $38 offering price, a person familiar with the matter told the WSJ.
Morgan Stanley was in charge of an overallotment of about 63 million shares that can be used to help support Facebook's share price. The underwriters are given the option to buy the overallotment of shares from the company at a discount.
The underwriters bought from Facebook the offering's 421,233,615 shares, but sold into the market 484,418,657 shares, including the overallotment and doing so made the underwriters "short" 63,185,042 shares, the paper said.
Morgan Stanley could not immediately be reached for comment by Reuters outside of regular U.S. business hours. (Reporting by Sakthi Prasad; Editing by David Cowell)