An initial public offering (IPO) refers to the first time a company publicly sells shares of its stock on the open market. It is also known as "going public."
The proceeds from the sale of stock shares in an initial public offering provide the issuing company with capital. For this reason, many start-up companies issue IPOs because they're seeking a source of capital to fund growth.
IPOs are introduced to the market by an underwriting investment bank, which aids the issuing company by soliciting potential investors. In addition, the underwriter helps the issuing company to settle on the price at which the stock should be offered to investors.
IPOs represent the first time an issuing company will financially benefit from the public sale of its stock. Following the IPO, shares trade between buyers and sellers on the open market, whereby the underlying company receives no compensation.
For a company, the capital earned from selling its shares to the public act can act as a major boost the the business' growth, making the idea of an initial public offering attractive. For investors, IPOs are a significantly higher risk as opposed to a currently traded stock. A lack of historical data combined with a usually limited history behind the company can make purchasing recently issued shares more risky.
: the first time a company's stock is offered for sale to the public
What made you want to look up IPO? Please tell us where you read or heard it (including the quote, if possible).
Name More Food!
Can you spell these 10 commonly misspelled words?
TAKE THE QUIZ
Test Your Knowledge - and learn some interesting things along the way.
TAKE THE QUIZ
Test your knowledge of food vocabulary!
Take the quiz
Is that your picture under "Largest Vocabulary"?
Take the quiz
Can you spell these 10 commonly misspelled words?
Take the quiz
SCRABBLE® fans, sharpen your skills!
Play the game
