pre-IPO

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Pre-IPO

An offering of shares in a company before its initial public offering (IPO). Pre-IPO offerings are available only to a limited number of individuals, and are done in advance of an expected IPO. Pre-IPO prices are generally much lower than they would be at the IPO, but are risky for the investor, as their value is contingent upon the company eventually making an IPO. This is because pre-IPO shares attract little demand in situations in which there is insufficient demand for an IPO soon after; they usually become illiquid securities.

pre-IPO

An offering of a company's shares prior to the firm's initial public offering. Investing in a pre-IPO tends to be very risky, in part because the planned IPO may never take place. In addition, shares from a pre-IPO are unregistered and are likely to be very difficult to sell until the public offering is completed.
Case Study Acting Securities and Exchange Commission chairman Laura Unger told a congressional subcommittee in July 2001 that 16 of 57 analysts reviewed by SEC staffers had invested in 39 pre-IPOs of companies they subsequently covered. In most cases shares offered in pre-IPOs are priced substantially lower than the subscription price in the subsequent IPO, meaning that many analysts who participated were able to acquire shares at very low prices. The conflict of interest is clear: analysts are likely to have a personal interest in promoting stocks they own, thus tainting the independence of their recommendations. Corporations are anxious to have analysts come on board as shareholders, in part because of the creditability analyst ownership conveys to the investing public. Analyst ownership may also result in positive investment recommendations that become a marketing campaign for the firm's stock.
References in periodicals archive ?
This latest IPO special follows on from anyoption's hugely successful Facebook and Twitter pre-IPO offerings, the first of their kind within the industry.
As FINRA's Investor Alert Pre-IPO Offerings - These Scammers Are Not Your Friends explains, pre-IPO speculation involves buying unregistered shares in a private company before the initial public offering (IPO) of securities.
com, a unique online private equity community that simplifies the accessibility of investing in pre-IPO offerings recently launched The Private Equity Source(TM), an investor community dedicated entirely to the venture capital marketplace.
com, a unique online private equity community that simplifies the accessibility of investing in pre-IPO offerings and offers investors unprecedented access to private equity, has closed its previously announced acquisition of Angeltips.
We saw the great potential for such a market when we founded DSM in 1993 for pre-IPO offerings.