Morgan Stanley Faces First Test After Facebook IPO Flop

Morgan Stanley is taking ServiceNow Inc. public this week in the first U.S. technology initial public offering since Facebook, a sale that may be crucial in preserving its position as Silicon Valley’s go-to bank.

Bloomberg reports that Morgan Stanley has been under fire for how it led the $16 billion Facebook sale after the shares plunged as much as 32 percent since their May 17 debut. That’s put the New York-based firm under more pressure than usual to balance ServiceNow’s expectations with those of investors when it prices the $186.4 million IPO ofthe cloud-based software maker on June 28.

'Everybody is going to be watching this IPO, and Morgan Stanley’s reputation is on the line', said Keith Wirtz, who oversees $15 billion as chief investment officer at Fifth Third Asset Management in Cincinnati. 'If the price is too low, the company is underserved; if the price is too high, like Facebook, investors will be frustrated'.

Morgan Stanley’s dominance in the IPO market is at stake. The firm is the No. 1 underwriter of global IPOs and is on track to lead the most initial offerings by Internet and technology companies this year, according to data compiled by Bloomberg. The outcome of ServiceNow’s IPO is also likely to influence plans to go public by other technology companies such as Palo Alto Networks Inc. and Kayak Software Corp. and may help revive the broader IPO market.

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Morgan Stanley Faces Test on ServiceNow IPO After Facebook Flop