IPO (Initial Public Offering)
A company's debut on the public stock market
Definition
An Initial Public Offering (IPO) is the first time a private company offers shares to the public on a stock exchange. Companies use IPOs to raise capital for growth, allow early investors to exit, and gain access to public markets. IPOs are priced by underwriting banks and often experience significant volatility in the weeks following the offering as price discovery occurs.
Example
When Airbnb went public in December 2020 at $68 per share, the stock opened at $146 — more than double the IPO price — on the first day of trading. Early institutional investors who received IPO allocations saw immediate gains, while retail buyers paid much higher prices.
Related Terms
Frequently Asked Question
What is an IPO?
An IPO is when a private company first sells shares to the public. It raises capital for the company while giving early investors an exit. IPO stocks are often volatile as the market establishes a fair price.
APA Citation
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· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.