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Facebook Stock May Tank This Week As Banks Run For The Hills
• businessinsider.com, Edward KrudyAs the underwriter, Morgan Stanley
But the bank will not support the stock indefinitely, analysts said, and once that firepower is gone, funds that received IPO stock looking for a bounce may decide to bail as well.
Lead underwriters in a stock essentially "short" the stock through what is known as an "over-allotment" of shares - they sell shares to the market that they do not own. If the stock has trouble, which Facebook did, the underwriter supports it by then buying more stock at the IPO price.