Also called initial public offering, going public

IPO

A company's first sale of stock to the public. It converts private ownership into something anyone can buy, and it is the moment a price becomes public.

Updated 2026-09-05

An initial public offering is a company's first sale of shares to the public. Private owners sell part of their stake, or the company issues new shares, and from that day the price is set by anyone who wants to trade it.

The seller has better information than the buyer and chooses the timing, which is a structural disadvantage worth naming. Companies go public when conditions are favourable, and the prospectus is written by the seller's lawyers.

A newly listed company is also the hardest kind to value. There is little history to derive a growth rate from, and beta measured over a few months of post-IPO trading is measuring the lock-up schedule and the shifting holder base rather than the business. Angie marks these low confidence for exactly that reason.

See also

  • Primary market — Where securities are sold for the first time and the money reaches the company. Every share trades here exactly once.
  • Prospectus — The disclosure document for a securities offering. It is written by lawyers to be complete rather than readable, and the risk factors section is the part worth reading.
  • Lock-up — A period after an IPO during which insiders may not sell. Its expiry releases a large block of supply on a known date, and the price usually knows it is coming.
  • Startup beta adjust — Dampens an unstable post-IPO beta by 15%. A company with only months of trading history measures its own novelty as much as its risk.

← See this one in the deck

Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.

IsiofiaIsiofia