IPO
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IPO
Initial Public Offering
The first price for which a company offers to sell stock in itself when it moves from private ownership to public trade. More generally, it refers to the actual first sale of stock to the public. Small companies looking for a new source of financing offer most IPOs, but large companies who wish to be publicly traded can offer them as well. An IPO is generally a risky investment, because one does not know how much demand will exist for the stock after its initial offering; the risk comes from the uncertainty about the stock's resale value. See also: Publicly-traded company.
IPO
Initial public offering (IPO).
When a company reaches a certain stage in its growth, it may decide to issue stock, or go public, with an initial public offering (IPO). The goal may be to raise capital, to provide liquidity for the existing shareholders, or a number of other reasons.
Any company planning an IPO must register its offering with the Securities and Exchange Commission (SEC).
In most cases, the company works with an investment bank, which underwrites the offering. That means marketing the shares being offered to the public at a set price with the expectation of making a profit.