After-Market Performance

When a company's board of directors decides it needs to raise money, it allows individuals to invest in the company by selling shares of stock. This is called the initial public offering (IPO), and it is usually greeted with much fanfare, juggling, and galaxy-wide celebrations originating with the company's board of directors. How the stock performs after the IPO is called after-market performance.

If the stock market were a middle school dance, the IPO would be the excitement experienced when a boy decides to ask a girl to dance. The after-market performance would include all the awkward seconds, sweaty palms, and thinking of things to say once the boy arrives. Although the IPO is necessary, it's what happens afterward that determines the ultimate outcome.