Finance: What is an IPO?

What is an IPO? IPO stands for initial public offering. These are used when a company decides to go public; meaning people can buy shares of the company at the IPO price. Companies use IPOs to raise capital, but becoming a publicly traded company comes with a whole new set of rules in terms of financial reporting and the like.

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Transcript

00:19

words tell the story and i pl refers to a

00:21

company who's raising money by selling shares of itself to

00:25

the public for the first time a maiden voyage in

00:28

public funding if you will Whatever dot com has forty

00:35

million shares outstanding after three private rounds with venture capitalists

00:38

and private investors it wants to raise money to go

00:41

big internationally And for the first time it will offer

00:44

shares to joe and jill public And that means that

00:48

all of it shares will be tradable publicly on the

00:51

open market like on nasdaq or the new york stock

00:54

exchange That is the insiders early investors founders et cetera

00:58

will be able to just call their broker at schwab

01:01

or fidelity or wherever and sell their shares get liquid

01:05

and buy themselves a maserati because it's not what everyone

01:08

does after a nice meal So whatever dot com sells

01:11

ten million shares a twelve bucks each to raise one

01:13

hundred twenty million dollars which they can spend to build

01:16

out offices all over the world So yeah that's an

01:18

ai po and that's Why a company generally wants to

01:21

make shares available to the public because once you've made

01:24

an initial public offering and you make money off the

01:27

sales of your stock you khun by as many hippos

01:30

as you like and just remember to feed them three

01:33

times a day they get Cranky if they go too 00:01:35.158 --> [endTime] long in between No