Facebook Slump Deepens on News Morgan Cut Sales Estimates Pre-IPO

Originally published at Fox Business Shares of Facebook (FB: 32.52, -1.51, -4.44%) took another tumble on Tuesday morning as word spread that the company's lead underwriter slashed its revenue target during the social-networking heavyweight's IPO road show. The latest slide gives further fuel to critics who believed Facebook's initial public offering overvalued -- and overhyped -- the company. According to Reuters, lead underwriter Morgan Stanley's (MS: 13.60, +0.42, +3.15%) consumer Internet analyst told major clients he was reducing his second quarter and 2012 revenue forecasts during the run-up to Facebook's $16 billion IPO. Two investors who were advised of the new forecast from Scott Devitt told Reuters they were shocked by the disclosure and say it may have helped contribute to the stock's 10% plunge on Monday. Typically lead investment banks paint rosy pictures about the companies they are bringing public. "This was done during the roadshow -- I've never seen that before in 10 years," a mutual-fund source who was called by Morgan Stanley told the wire service. Continue reading this article here.