An initial public offering (IPO) is the first public sale of a company’s stock. Individual investors may be able to buy IPO shares either through an eligible brokerage or on the public market after trading begins. However, access is often limited, and you may not be guaranteed shares.
Understanding IPOs
Companies go public for multiple reasons, including raising additional capital, creating a liquidity event for founders and early investors, and boosting a company’s reputation and brand credibility.
IPO shares are sold on the primary market by underwriters on behalf of the company. After that initial listing, they usually trade on a stock exchange such as the Nasdaq or the New York Stock Exchange (NYSE).
Investing in an IPO
Access to IPO shares doesn’t guarantee a winning investment. An IPO can be an inherently volatile time for a company. According to the Securities and Exchange Commission, IPOs should be treated as speculative investments rather than sure things.
To invest in an IPO, you’ll need to check if your brokerage offers IPO access, review the preliminary prospectus, decide how much to request, place an indication of interest or conditional order, and monitor the stock after it begins trading.
Original reporting: KEYT (Ventura/Santa Barbara) — read the source article.
