IPO Basics: Conclusion
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.
The first sale of stock by a private company to the public. IPOs ...
An exchange-traded fund that focuses on stocks that have recently ...
The process of selling shares that were formerly privately held ...
The promotion of inflated pre-IPO prices for the sake of obtaining ...
A type of stock initial public offering (IPO) that trades below ...
In terms of an IPO, the period where an issuer is subject to ...
An initial public offering, or IPO, is the first sale of stock by a new company, usually a private company trying to go public. ... Read Answer >>
The quick answer to this question is that an IPO can be shorted upon initial trading, but it is not an easy thing to do at ... Read Answer >>
Going public refers to a private company's initial public offering (IPO), thus becoming a publicly traded and owned entity. ... Read Answer >>
Learn whether mutual funds can invest in IPOs. IPO investing is appealing because there is a big upside, but there is considerable ... Read Answer >>
Purchasing a highly anticipated initial public offering may seem like a sound investment strategy, but most individual investors ... Read Answer >>
Learn about the two ways for a company to go public: fixed price and book building. Under fixed price, the share price is ... Read Answer >>