Corporate actions
IPO
Also called Initial public offering or Flotation
A private company selling shares to the public and listing on an exchange for the first time.
How it works
An IPO raises capital for the company, gives existing owners a way to sell, and creates a public market in the shares.
The seller chooses the timing, which is a structural disadvantage for buyers: companies list when conditions are favourable to sellers.
Where it misleads people
Long-run studies find IPOs underperform the market on average over the following years. The exceptions are famous, and they are exceptions.
Related terms
- ListingA company’s admission to trade its shares on a particular exchange, under that exchange’s rules.
- Lock-up periodA window after an IPO during which insiders are barred from selling their shares.
- Free floatThe portion of a company’s shares that is actually available to trade in the market.
- UnderwriterThe investment bank that arranges a share or bond issue and often guarantees to buy what is unsold.
More in Corporate actions
- Guidance
- Merger and acquisition
- Ex-dividend date
- Payment date
- Earnings surprise
- Payout ratio
- Earnings revision
- Proxy vote
All 26 Corporate actions terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.