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Initial Public Offering. When a company first sells stock to the public.
Why It Matters
IPOs are when private companies become public - Facebook's 2012 IPO raised $16 billion in one day. They're exciting but risky: some IPOs (Google, Amazon) made investors rich; others (WeWork, many 2021 tech IPOs) tanked. The average investor rarely gets IPO shares at the offering price - those go to big institutions and wealthy clients.
Key Points
- The 'IPO pop' (first-day surge) benefits those who got shares at offering price, not retail buyers
- Many financial advisors suggest waiting 6+ months after IPO before buying - let the hype settle
- Lock-up period (usually 90-180 days): insiders can't sell shares immediately, but when they can, the stock often drops
Related Terms
Common Questions
Initial Public Offering. When a company first sells stock to the public. IPOs are when private companies become public - Facebook's 2012 IPO raised $16 billion in one day. They're exciting but risky: some IPOs (Google, Amazon) made investors rich; others (WeWork, many 2021 tech IPOs) tanked.
IPOs are when private companies become public - Facebook's 2012 IPO raised $16 billion in one day. They're exciting but risky: some IPOs (Google, Amazon) made investors rich; others (WeWork, many 2021 tech IPOs) tanked. The average investor rarely gets IPO shares at the offering price - those go to big institutions and wealthy clients.
The 'IPO pop' (first-day surge) benefits those who got shares at offering price, not retail buyers
Many financial advisors suggest waiting 6+ months after IPO before buying - let the hype settle
Lock-up period (usually 90-180 days): insiders can't sell shares immediately, but when they can, the stock often drops