<#-- Rebranding: Header Logo--> <#-- Rebranding: Footer Logo-->
  1. IPO Basics: Introduction
  2. IPO Basics: What Is An IPO?
  3. IPO Basics: Getting In On An IPO
  4. IPO Basics: Don't Just Jump In
  5. IPO Basics: Tracking Stocks
  6. IPO Basics: Conclusion

Let's review the basics of an IPO from this tutorial:

  • An initial public offering (IPO) is the first sale of stock issued 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, where public shareholders get the right to vote in company decisions.
  • Private companies typically have a small number of closely knit shareholders.
  • Public companies can have thousands of different shareholders.
  • Going public raises cash and provides many benefits for a company.
  • 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 to institutional investors.
  • Companies hire a syndicate of 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 in the market 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.

Related Articles
  1. Investing

    5 Tips For Investing In IPOs

    Are you thinking of investing in IPOs? Here are five points to consider before jumping into the initial public offering market.
  2. Investing

    Initial Public Offering (IPO) Explained

    An 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.
  3. Insights

    The Ups and Downs of Initial Public Offerings

    Learn why initial public offerings (IPOs) aren't the best option for every company. Find out factors to consider before going public.
  4. Insurance

    IPO Lock-Ups Stop Insider Selling

    Ownership plays a key role when companies go public. Find out how.
  5. Investing

    The Pros And Cons Of A Company Going Public

    Small companies looking for growth often use an initial public offering to raise capital. But going public brings both advantages and disadvantages.
  6. Investing

    Market Volatility, Weak Economy Delay Major IPOs

    These outside factors can delay and affect IPOs when they are finally listed on a stock exchange.
  7. Investing

    IPO Basics Tutorial

    What's an IPO, can you get in on one, and will they make you rich?
  8. Insurance

    IPOs For Beginners

    IPO is one of the few market acronyms that almost everyone is familiar with. Discover if IPOS are worth all the attention.
Trading Center