Stock Market Investors » Glossary of Stock Terms » What is an Initial Public Offering - IPO?

What is an Initial Public Offering (IPO)?

Initial public offering (also know as IPO) represents the first issuance of a stock by a particular company. This is done when a company decides to offer stocks for public trading.

IPO is subject to different laws and regulations. When a company decides to go public the media immediately directs its attention to it. Thus, hot stocks experience a huge increase in their prices. However, such huge rises are often followed by a huge decrease.

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