IPO stands for Initial Public Offering. This means that a company sells ownership shares of the company to the public for the first time. It’s the first time people outside the company are able to buy a piece of the company. Companies sell stock or “go public” for a few reasons. In most cases, companies want to raise money to fund their business. Also, a company can legally have only 500 shareholders before selling shares in an IPO. This is basically why Facebook had an IPO. They were near the limit of investors they could have, so they decided to go public. Although there were some issues on the first day of trading, the stock traded at levels that made the company worth $100 billion. From that perspective, the Facebook IPO was one of the largest and most successful ever.
Tags: Money Mondays