What is an initial public offering (IPO)?

An initial public offering (IPO) is when a private company sells shares of its stock for the first time to the public and becomes a public company. When a company makes this transition, it is no longer in the hands of the private owners and investors but is now under public ownership.

What is an IPO & how does it work?

An IPO is an initial public offering. In an IPO, a privately owned company lists its shares on a stock exchange, making them available for purchase by the general public. Many people think of IPOs as big money-making opportunities—high-profile companies grab headlines with huge share price gains when they go public.

Why do IPOs?

Why Do an IPO? An IPO may be the first time the general public can buy shares in a company, but it’s important to understand that one of the purposes of an initial public offering is to let early investors in the company cash out their investments.