Business, Legal & Accounting Glossary
Initial public offering (IPO) or stock market launch is a type of public offering in which shares of a company are sold to institutional investors and usually also retail (individual) investors.
IPO is an acronym for Initial Public Offering. An IPO is the first sale of shares in a company to the public. Once an IPO occurs, a company will be listed on a major stock exchange, and shares will begin to trade immediately. The IPO market goes in cycles depending upon the appetite of investors for new issues. Often the share price will increase quickly after an IPO, so purchasing shares at the IPO price may be a coveted investment opportunity. When management says it plans to take a company public, it means that an eventual IPO is planned. A successful IPO can raise a large amount of capital for the newly public company and create substantial wealth for insiders who owned shares prior to the IPO.
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This glossary post was last updated: 9th February, 2020