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Initial Public Offering

POSTED ON November 19, 2019

How finance folk use it

IPO stands for Initial Public Offering. This refers to the first time that a company’s stock is made available for institutions and individuals to buy.

When a company holds its IPO, that act is usually referred to as “going public,” as opposed to remaining a private enterprise.

Is it good or bad?

An IPO can be good for a company because of the influx of money that it can bring in. This, in turn, will provide capital for the company’s future expansion plans. Of course, the company will then become answerable to everyone who owns stock, because these people have in fact become part owners.

An IPO can be good for institutions and individuals, because it gives them a chance to own part of a company and benefit from its success (from stock value and dividends).

What it means for you

An IPO is a chance for you to support and even own part of a company, and to directly gain from its success. If the company does well, the stock value will rise and you will have made money off your investment.

Don’t forget that any type of investment, especially stocks, come with some form of risk. There is no guarantee that you will profit from making the investment, and there is also a chance of losing some or all of your principal. This is especially true for stocks, which are among the most aggressive types of investments.