Initial Public Offering (IPO)

Definition

The first sale of a company's shares to the public through an offering. It gives the company or existing shareholders a way to sell ownership to public investors.

An IPO usually goes hand in hand with a stock exchange listing. The company can issue new shares to raise money, and existing owners can sometimes sell some of theirs in the offering. Once trading begins, the market price can move above or below the offer price.

Example

Company A sells shares to public investors for the first time at $20 per share. That sale is its IPO.