Morgan Stanley CEO: Some Facebook investors were 'naive' Morgan Stanley chairman and CEO James Gorman, discusses his company's efforts to raise liquidity amid fears of a possible downgrade from Moody's. Updated at 5:40 p.m. ET: Investors who expected a big opening day "pop" for Facebook (FB) stock were "naive" and bought it for the wrong reasons, Morgan Stanley CEO James Gorman said Thursday. Gorman, in an interview with CNBC's Maria Bartiromo, defended the investment bank's handling of the landmark initial public offering and urged investors to have patience, saying the story is still in its early days. Gorman acknowledged there was "enormous confusion" around the pricing of the stock on its opening day, which he largely laid at the door of the Nasdaq stock market. Nasdaq has acknowledged serious problems in handling the enormous volume of the IPO May 18, which drew unprecedented interest from retail investors. Referring to the initial hours of trading, when buyers and sellers were not getting price confirmations, he said: "That confusion frankly in a deal of almost unprecedented size, against a macro backdrop of everything going on in Greece, created a potent elixir, if you will, that really set this thing aflame." Gorman defended the decision of underwriters to price shares at $38, the top end of the estimated range, and to increase the size of the offering, citing the huge demand. Facebook shares since have fallen more than 20 percent to under $30. Gorman also urged investors and observers to take a longer-term view, saying that Facebook has only been public for less than two weeks and remains cause for an "American celebration." "The group of people who thought they were buying the stock so they could get an enormous 'pop' were both naive and bought it under the wrong pretenses," Gorman said. Companies like Facebook go public to establish a "long-term investor base," not for the opening-day action, he said. "To that individual I would hope they haven't panicked during the flurry of the past few days," he said. We remain in a very volatile period. Gorman also defended Morgan Stanley's decision to give verbal guidance on Facebook's prospects from an analyst in the days before the IPO only to institutional investors, and not to retail investors. He said that was standard practice for underwriters for IPOs. The substance of the guidance, that Facebook faced a tough revenue challenge as more of its users migrate to the mobile platform, was widely available in the company's final registration statement filed with federal regulators and widely reported on, he said. Related: 'Facebook effect' sends a chill through IPO market