Monday, May 22, 2017

What is an IPO?

An IPO is the abbreviation for an "Initial Public Offering".  An initial public offering is the first time a corporation's shares are available to the general investing public.  Some other ways to put it include:

Initial public offering (IPO) or stock market launch is a type of public offering in which shares of a company usually are sold to institutional investors that in turn, sell to the general public, on a securities exchange, for the first time. (Source; Wiki)

An initial public offering (IPO) is the first time that the stock of a private company is offered to the public. IPOs are often issued by smaller, younger companies seeking capital to expand, but they 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 determine what type of security to issue, the best offering price, the amount of shares to be issued and the time to bring it to market. Read more: Initial Public Offering (IPO) by Investopedia
After an IPO, shares (stock) of a company trade on a stock exchange and the general public can normally purchase the stock through their broker.  These brokers can include account at private wealth management firms like Merrill Lynch or Morgan Stanley or trading accounts online like Ameritrade or ScottTrade.  After an IPO the company which was once solely owned by private investors has public investors.  This triggers certain disclosure requirements required by the S.E.C. and the stock exchange where the stock is now listed.  For example, large companies trading on the New York Stock Exchange are required to disclose audited financial statements every quarter and one annual report that showcases the company's activities and reports their financial statements once a year. 

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