Initial Public Offering (IPO)
The first time a private company sells shares to the general public on a stock exchange.
What is IPO?
An Initial Public Offering (IPO) is the process through which a private company offers shares to the public for the first time, transitioning from a privately held entity to a publicly traded company. The company works with underwriting investment banks to determine an offering price, file a prospectus (S-1) with the SEC, and conduct a roadshow to market shares to institutional investors. IPOs allow companies to raise capital for growth and provide early investors and employees with liquidity. Newly public shares are subject to a lock-up period — typically 90 to 180 days — during which insiders are restricted from selling their shares.
Example
Meta Platforms (formerly Facebook) went public on May 18, 2012, at an IPO price of $38 per share, raising $16 billion and giving the company a market capitalization of approximately $104 billion — at the time, the largest technology IPO in U.S. history.
Source: SEC EDGAR — Meta S-1 Filing