Tuesday, January 18, 2011

E-Commerce China Dangdang's (DANG) CEO Criticizes IPO Underwriter Morgan Stanley on Weibo!

A pretty amusing story in the Wall Street Journal on a rant towards an (alleged) Morgan Stanley employee on China's version of Twitter (Weibo), by E-commerce China Dangdang's CEO in regards to undervaluing the IPO (hence shortchanging the company).  A few points - first his wife did not seem to have much issue it when she was asked that exact question the day of the IPO [Dec 8, 2010: Meet China's Newest Billionaire - E-commerce China Dangdang's CEO Peggy Yu Yu]  and second, don't hate the playa, hate the game!  Investment banks want to create buzz so they want to price IPOs so they get huge first day spikes.  The IPO frankly was quite fairly priced on any rationale basis.  We no longer live in a rationale market, so it just happened to price in a market where Ben Bernanke guarantees no one loses and Chinese internet IPOs are being priced like U.S. internet IPOs of 1999.
  • The original midpoint valued the company at 48 times annual earnings, based on third-quarter results. That was 64% higher than the median of 29.2 times estimated profit for 11 U.S.-traded Internet retailers.
Last, don't worry - the quiet period ends this week so you can be sure the Morgan Stanley analyst will be shouting from the rooftops to the retail crowd what a "value" the stock is, even up 100%+ from the IPO price of just a month ago.  You and your wife are instant billionaire's - just be happy and let the Wall Street machine do the rest.

Via WSJ:
  • E-Commerce China Dangdang Inc. Chief Executive Guoqing Li lost his temper Sunday on China's biggest Twitter-like microblogging service, accusing Morgan Stanley of undervaluing his company's initial public offering and exchanging off-color insults with a user who claimed to work for the financial services firm.  
  • Mr. Li made the remarks on microblogging service Sina Weibo to a user going by the name Mishi De Weiyi, whose profile listed Morgan Stanley as her employer.  "I am here openly criticizing investment banks, criticizing Morgan Stanley, what, Morgan Stanley can't be criticized? Not be cursed? You foreigners' flunky!" he said to the user.  
  • Dangdang, often likened to Amazon.com, is an online bookseller looking to expand its product range to fuel growth. It sold $272 million of shares in its IPO, including more than $56 million sold by Mr. Li and other existing shareholders, before listing on the New York Stock Exchange on Dec. 8. Morgan Stanley was a lead underwriter. Dangdang's American depositary shares recently traded at $33.86, versus their IPO price of $16.00.
  • "I regret not giving the job to Goldman Sachs," Mr. Li—who co-founded Dangdang with his wife, Peggy Yu—said in his Sunday tirade.
  • Mr. Li's remarks included made-up "rock-and-roll song lyrics," as he called them, that managed to mix talk of the IPO silent period with highly profane mother insults. Mr. Li's microblogging opponent, Mishi De Weiyi, was at least as vicious and foul-mouthed, using crude terms to suggest Li's father shouldn't have conceived him and saying he has an "IQ so low you don't even understand the basic principles of being human."
  • Morgan Stanley, after a preliminary investigation, said it doesn't believe any of its employees actually wrote the blog posts, a company spokesman said. "These comments are offensive, highly unprofessional and do not reflect industry practices. We condemn such behavior that can risk damaging a company's brand and reputation," he said. Morgan Stanley declined to comment on Mr. Li's allegations of undervaluing its shares.
  • Dangdang said in a statement Mr. Li's remarks were his own, and that they also serve as a warning to other companies seeking a U.S. listing.

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