What is an IPO? by OWCareers
Answer by OWCareers:
IPO stands for “Initial Public Offering”. It is the maiden sale of equity to the general public. An issuance of shares is called IPO only when a company offers its shares to the public for the first time.
When a newly formed company or a government owned company or a private company wants to raise capital and increase its resources, wants to have more liquidity in its capital or wants to enjoy the benefits of a publicly traded company, then it opts to choose IPO.
Investing in IPO’s of newly formed companies is a risky investment. You could lose all of your money or you could get really rich. However, IPO’s of established companies could prove gold rush for you if you opt to invest in them.