Let's review the basics of an IPO:
- An initial public offering (IPO) is the first sale of stock by a company to the public.
- Broadly speaking, companies are either private or public. Going public means a company is switching from private ownership to public ownership.
- Going public raises cash and provides many benefits for a company.
- The dotcom boom lowered the bar for companies to do an IPO. Many startups went public without any profits and little more than a business plan.
- Getting in on a hot IPO is very difficult, if not impossible.
- The process of underwriting involves raising money from investors by issuing new securities.
- Companies hire investment banks to underwrite an IPO.
- The road to an IPO consists mainly of putting together the formal documents for the Securities and Exchange Commission (SEC) and selling the issue to institutional clients.
- The only way for you to get shares in an IPO is to have a frequently traded account with one of the investment banks in the underwriting syndicate.
- An IPO company is difficult to analyze because there isn't a lot of historical info.
- Lock-up periods prevent insiders from selling their shares for a certain period of time. The end of the lockup period can put strong downward pressure on a stock.
- Flipping may get you blacklisted from future offerings.
- Road shows and red herrings are marketing events meant to get as much attention as possible. Don't get sucked in by the hype.
- A tracking stock is created when a company spins off one of its divisions into a separate entity through an IPO.
- Don't consider tracking stocks to be the same as a normal IPO, as you are essentially a second-class shareholder.
InsightsLearn why private companies are waiting longer to have their IPOs. Understand why it may be more advantageous for a company to stay private.
InsuranceAn initial public offering (IPO) marks the start of a company's publicly traded life. Find out why companies undergo IPOs, and how the process works.
InvestingThinking of investing in IPOs? Here are five things to remember before jumping into these murky waters.
InvestingA public company has sold stock to the public through an initial public offering (IPO) and that stock is currently traded on a public stock exchange.
InsuranceInitial public offerings aren't the best option for every company. Consider these factors before "going public."
InvestingU.S. companies are choosing to be acquired instead of going public
InvestingPay attention to the length of time a company waits before going public and whether the prolonged period brings excessive valuation.
InvestingThese outside factors can delay and affect IPOs when they are finally listed on a stock exchange.
InsuranceIPO is one of the few market acronyms that almost everyone is familiar with. Discover if IPOS are worth all the attention.