The process by which a private company first sells shares to the public on a stock exchange, transitioning from private to public ownership. It allows companies to raise capital while giving early investors and employees a way to monetize their stakes.
The modern IPO process developed in the early 20th century, though the concept dates to the Dutch East India Company in 1602. 'Initial' comes from Latin 'initialis' meaning beginning, 'public' from Latin 'publicus' meaning of the people, and 'offering' from Old English meaning presentation, together describing the first presentation of company shares to public investors.
IPOs have become cultural phenomena that can make overnight millionaires out of company employees while sometimes leaving public investors holding overpriced shares - the dot-com era saw companies with no profits commanding billion-dollar valuations on their first day of trading. The traditional IPO process is now being challenged by direct listings and SPAC mergers, potentially revolutionizing how companies go public.
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