Facebook Inc (NASDAQ:FB) will face another milestone in the period after its initial public offering on Wednesday, when the quiet period barring analysts from banks that underwrote the offering are finally allowed to speak publicly of their research on the firm.
There is a forty day quiet period following offerings in which firms that underwrite IPOs are not allowed to publicly speak out on the firm involved in the offering. It is generally accepted that this move lowers the volatility that can occur in the weeks after a big offering.
On Wednesday the firms involved in the IPO, including Morgan Stanley (NYSE:MS), JPMorgan Chase & Co. (NYSE:JPM), and Golman Sachs Group, Inc. (NYSE:GS), will finally be able to publicly disclose their research on the outlook of Facebook. In the past these disclosures have resulted in boosts to the involved firm’s share price.
The Wall Street Journal reported today that on the day its quiet period ended, Linkedin Corp. (NYSE:LNKD) rose 12%. The article goes on to enumerate the average ratings of analysts on IPOs in recent decades after the quiet period ended. Those statistics reflect positively on Facebook’s outlook for tomorrow.
From 2006 to 2011 700 IPOs resulted in buy or hold ratings from analysts after the 40 day waiting period ended. Those IPOs that justified a sell rating usually spiked after their IPO and were overvalued in the eyes of analysts after the forty day waiting period had elapsed.
At the moment of the twenty analysts that are currently following the company, 10 rate it a buy at the current price while 8 rate it a hold. Just two of the current analysts rate the company a sell. In all likelihood the reports released tomorrow will advise investors to buy or hold the stock in the majority.
Facebook Inc (NASDAQ:FB)’s shares have been recovering to some extent from the huge falls after its IPO in recent weeks. The stock is up around 3.5% at time of writing to 33.27. Tomorrow may see a greater recover in the firm’s share price as investors are reassured by analyst reports from the major banks.
Since the IPO Facebook Inc (NASDAQ:FB) has managed to make some headway in dispelling the problems that were focused on in the wake of the offering. The company has announced a greater focus on mobile advertising, that sector’s revenue remains a huge worry for those holding the stock.
In a more wide reaching move, Facebook Inc (NASDAQ:FB) began advertising for the first time today on an outside website. Zynga, a long standing Facebook partner, began showing ads on the website. Many have pointed to a third party advertising platform as the future of the company.
Tomorrow there will be a glut of new opinions on Facebook coming from the lead underwriters. Those analysts have been sitting on their hands for a month and a half. They will have a lot to say and the market will listen. Tomorrow that pent up opinion may show a swing in the firm’s stock price.