Explainer
IPO
Initial Public Offering
The first time a private company sells shares to the general public.
An IPO is the moment a private company lists its shares on a public stock exchange for the first time. Before it, only founders, employees and early investors own stock. After it, anyone with a brokerage account can buy in.
Companies go public to raise large amounts of money, give early backers a way to cash out, and gain visibility. The trade-off is scrutiny: public companies must publish audited results every quarter and answer to shareholders.
Banks called underwriters help set the offer price and sell shares to institutional investors before trading begins. The first-day price often differs from the offer price, which is why IPO day gets so much attention.
Illustrative explainers. Figures in examples are hypothetical.