Account Info
Log Out
No matches yet
Operations too frequent. Please try again later.
Please check network settings and try again Refresh Refresh
History record delete
    Quotes All >
      News All >
        Log in to access Online Inquiry

        What to Know about IPOs

        Views 11k2022.09.21

        Introduction to Initial Public Offering (IPO)

        U.S. IPO market heated up again. According to Dealogic, capital raised in IPOs on Nasdaq in 2020 is $12.2 billion and capital raised in IPOs on NYSE is $10.9 billion as of June 5.

        Royal Pharma went publised on Tuesday, June 16, soaring about 59% on the first day of trading.

        Royalty Pharma soared 59% in Nasdaq debut

        Biopharmaceutical company $Royalty Pharma PLC(RPRX.US)>Biopharmaceutical company $Royalty Pharma PLC(RPRX.US)$ soared 58.93% in its Nasdaq debut on Tuesday. <nbsp;soared 58.93% in its Nasdaq debut on Tuesday. 

        The offering reeled in over $2.2 billion and broke the record $1.93 billion set by Warner Music Group earlier this month, becoming the biggest IPO of the year in the U.S.

        The IPO marks the successful transition of billionaire Pablo Legorreta's investment operation from a deeply opaque private equity model to a publicly traded vehicle listed on Nasdaq. 

        The company sold 77.7 million shares at $28 apiece in the IPO, which valued Royalty Pharma at $16.7 billion.

        Most of the money raised in the IPO will be used by Royalty Pharma to invest in more drug royalty streams.

        About Royalty Pharma

        Royalty Pharmais the largest buyer of biopharmaceutical royalties and a lending funder of innovation across the biopharmaceutical industry.

        What is IPO?

        Initial public offering (IPO) is the first time a company sells its shares to the public. Through this process, colloquially known as floating, or going public, a privately held company is transformed into a public company. Initial public offerings can be used to: 

        • raise new equity capital for companies

        • monetizethe investments of private shareholders such as company founders or private equity investors

        • enable easy trading of existing holdings or future capital raising by becoming publicly traded

        After the IPO, when shares are traded freely in the open market, money passes between public investors. For early private investors who choose to sell shares as part of the IPO process, the IPO represents an opportunity to monetize their investment. 

        Although IPO offers many benefits, there are also significant costs involved that should be taken into consideration.

        Advantages of IPO

        This ability to quickly raise potentially large amounts of capital from the marketplace is a key reason many companies seek to go public. Capital can be used to fund research and development (R&D), fund capital expenditure, or even used to pay off existing debt.

        IPO also brings these benefits to the previously private company:

        • Increasing exposure, prestige, and public image

        • Facilitating acquisitions (potentially in return for shares of stock)

        • Enlarging and diversifying equity base

        • Creating multiple financing opportunities: equity, convertible debt, cheaper bank loans, etc.

        • Attracting and retaining better management and employees through liquid equity participation

        Disadvantages of IPO

        Despite the benefits it brings, there are also many financial and management costs related to IPO. The disadvantages to completing an initial public offering include:

        • Requirement to disclose financial and business information

        • Significant legal, accounting and marketing costs, many of which are ongoing

        • Risk that required funding will not be raised

        • Increased risk of litigation, including private securities class actions and shareholder derivative actions

        In rare circumstances, the stock price falls below the initial public offering price on the day of listing. This may result from market stagnancy or issue prices are so high that investors refuse to purchase the stock.

        When it happens, investors may think the company uses information asymmetry to cheat on them and it discourages market confidence. The company's reputation and stock prices will be negatively affected.

        Source: Wikipedia

        Trade like a pro with moomoo

        Get free stock and start your professional trading today

        Terms and conditions apply right-arrow

        This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content.

        Moomoo is a financial information and trading app offered by Moomoo Technologies Inc.

        In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC).

        In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services Licence (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore.

        In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our websites and Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.