What Is An Initial Public Offering (IPO)?

An Initial Public Offering or IPO is the very first sale of stock to the public by a private company. This is also known as 'going public'. There are two kinds of companies who will undertake an IPO:

Startup companies looking to raise capital and investors
Large private companies looking to become publicly traded

A company looking to conduct an IPO will usually employ an investment bank to help with the IPO, with the advisory service provided including valuation and timing.

Investing in IPO companies is usually risky as there is no historical data on the performance of the stock and the stock of newly public companies typically tends to fluctuate wildly after and on the IPO date.

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Patrick Curtis

Patrick Curtis is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. He has experience in investment banking at Rothschild and private equity at Tailwind Capital along with an MBA from the Wharton School of Business. He is also the founder and current CEO of Wall Street Oasis. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.

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