Morgan Stanley CEO Gorman Comments on Possible Credit Downgrades, Facebook IPO
He said that he anticipates Morgan Stanley's credit to be downgraded by firms like Moody's, but that the real question is by how much.
Gorman also said that Morgan Stanley has done a lot to improve its financial standing since the financial crisis. He claims that the company has doubled its liquidity and capital and has more than halved its leverage.
Also, Gorman stated that the financial services industry is “readjusting to a new reality.”
When asked about whether Morgan Stanley priced the Facebook IPO too high at $38, Gorman pointed out that possible prices of $50 and $70 were thrown around in the weeks preceding the IPO. He adds that the stock was also trading higher in the secondary markets.
He claims that Facebook's opening was “one of the most volatile openings for an IPO ever,” explaining that people were very confused at some points whether they were long or short.
Gorman also says that those who were expecting a pop in Facebook's share price in the first day were “naïve,” and that the point of an IPO is to find more long term investors.
As far as Facebook's future, Gorman encouraged viewers to see what happens in a year when the shares are not being affected by the current fury and frenzy.
He implied that Morgan Stanley might not yet be done with its underwriting duties on the Facebook IPO.
Disclosure: I do not own shares of Morgan Stanley of Facebook.
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