Initial Public Offering - IPO


DEFINITION of 'Initial Public Offering - IPO'

The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.

In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.

Also referred to as a "public offering."


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BREAKING DOWN 'Initial Public Offering - IPO'

IPOs can be a risky investment. For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future because there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, which are subject to additional uncertainty regarding their future values.

Embark on the interesting journey from the pre-IPO stage to the final IPO placement in the primary market - Read The Road to Creating an IPO and Interpreting a Company's IPO Prospectus Report.

  1. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously ...
  2. Pre-IPO Placement

    When a portion of an initial public offering (IPO) is placed ...
  3. IPO ETF

    An exchange-traded fund that focuses on stocks that have recently ...
  4. Tombstone

    A written advertisement placed by investment bankers in a public ...
  5. Public Offering Price - POP

    The price at which new issues of stock are offered to the public ...
  6. Oversubscribed

    A situation in which the demand for an initial public offering ...
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