Initial Public Offering Meaning and Definition

Know what is IPO Initial Public Offering all about. A simple meaning and definition of initial public offering as our investment terms for the day.

Initial Public Offering also known as IPO. IPOs sell shares to the general public. Companies offer IPO to attract more investors. Investing in the stock market doesn’t need to be complicated and difficult. It will only become easy, if you will learn different investment terms like dividends, capital gains and IPO or Initial Public Offering.

When companies want to get listed in the stock exchange, they tend to make an IPO. Most of the time, IPO stock prices are cheap, they start from cents or few bucks.

Initial Public Offering Meaning and Definition

“Closely held companies use IPOs to sell shares to the general public. Although some IPOs have turned out to be fabulous long-run performers, may languish following the hoopla that surrounds an inaugural issue”. (1)

Reference: C. Frederic Wiegold, Author, The Wall Street Journal Lifetime Guide to Money, Everything You Need o Know About Managing Your Finances – for Every Stage of Life, 1997 Hyperion, New York City

Initial Public Offering

Companies are attracting more investors when they have IPO. Some stock market investors will grab IPO if they know the company has a potential for growth.

The question is, should you buy IPO stocks? It depends. Say for example, Twitter and Facebook, assuming they offer IPO in the same date few years ago, which stocks should you buy?

You better analyze the company that offers initial public offering. Be wise enough in stocks to buy. Some successful investors focus on 3 to 5 stocks from stable companies with good balance sheet.