Initial Public Offering (IPO)
An IPO is when a private company first sells shares to the public on a stock exchange.
In an IPO, a company works with investment banks to set an initial share price, files regulatory disclosures, and lists its shares for trading. Existing shareholders — founders, employees, early investors — can sell existing shares, and the company can raise new capital.
IPO shares are allocated to institutional investors first; retail access varies by broker. Early trading prices often diverge significantly from the IPO price as the market discovers the real balance of supply and demand.
The lock-up period (typically 90–180 days post-IPO) prevents insiders from selling immediately — when it expires, a flood of shares can weigh on the price.
Further Reading
Jack Bogle's case for low-cost index funds, in under 300 pages.
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Recommended Reading & Tools
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Peter Lynch on how everyday investors can spot winners before the professionals do.
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