donwloadimg

Download App

Log in to access Online Inquiry

What Is An Initial Public Offering (IPO)?

Views 25812022.03.02
playBtn

Key takeaways

  • IPO is a way of raising funds without a loan.

  • An IPO is a company's transition to a publicly-traded stock.

  • Due to limited public information, investing in an IPO may be risky.

Understanding an IPO

An initial public offering is a process by which companies issue their shares to the public for the first time on a stock exchange. Put it simply, it’s a transition from a private company to a public company.

Why is there an IPO? From companies point of view, they can raise additional capital by selling their shares to the public for future expansion. For investors, they can invest and share in the profits of publicly-traded companies.

If the IPO performs well in the market, it's a win-win situation for both parties. However, all investments involve risks. Stock issuance is no exception. Please read the prospectus carefully before buying new stock.

Example

Snap went public on March 2, 2017, with an offering price of$17 per share, under the ticker of SNAP. It opened at $24 in its market debut, with a market capitalization of about $33 billion.

20211102000111636c38a0eb818.png

The IPO hype lasted only two days. Its stock price was on a downward trend later. However, Snapchat's shares price has continued to refresh records and soared more than 300% since 2020.

FAQs

  • How do I invest in an IPO?

The public can participate in the IPO in two ways: buy directly from the underwriter or the secondary market.

  • How to learn about an IPO company?

Unlike existing listed companies, newly listed companies previously disclosed very little information.

Blind investment can bring huge risks. Therefore, please read carefully the prospectus of the company to be listed, which contains a wealth of information required by the regulators.

  • What factors affect IPO performance?

In addition to the company's profitability, industry prospects, and institutional investors' views, IPO performance may also be affected by many other factors.

For example, market sentiment, demand, liquidity, and transaction volume... will all factor into the post-IPO performance.

The content in this article is intended for general circulation and informational purposes only. It does not take into account the investment objectives, financial situation or needs of any particular person and should not be relied on as advice or recommendation. Information provided in this article are not specifically intended for or specially targeted at the public in any specific jurisdiction. Neither Moomoo Inc. nor its affiliates are licensed Financial Advisers and do not provide financial advice. You are advised to consult your financial adviser before making any commitment to invest in any capital markets product. The information published is not and does not constitute or form part of any offer, invitation or solicitation to subscribe or to enter into any transaction in capital markets products. Moomoo is a professional trading app offered by Moomoo Inc. In the U.S., investment products and services on Moomoo are offered by Futu Inc., Member FINRA/SIPC. In Singapore investment products and services are offered through Futu Singapore Pte. Ltd., regulated by the Monetary Authority of Singapore (MAS). This advertisement has not been reviewed by the MAS. Moomoo Inc., Futu Inc. and Futu Singapore Pte. Ltd are affiliated companies. Any illustrations, scenarios, or specific securities referenced herein are strictly for illustrative purposes. Past investment performance does not guarantee future results. Investing involves risk and the potential to lose principal.

Trade like a pro with moomoo

Get free stock and start your professional trading today

Terms and conditions apply right-arrow