Wondering what is an IPO? IPO or Initial Public Offering usually refers to the offering through which a company goes from private company to public company.
The reason why it is an “initial” offering is that it goes first to institutional investors (big players like banks, hedge funds etc), before it is available for people like me and you (unless you’re Warren Buffet reading this. It’s all yours, boss!)
Initial Public Offerings can tell you alot about how a company is performing. If you compare that price to the current stock price you will know exactly if that company has been a good or a bad investment.
Some of the most notable IPO’s were the Alibaba IPO, Uber IPO and Etsy IPO. Here is a little bit about each just to get a feeling of that concept…
Alibaba IPO was at $68 a share in late 2014. Today (as of the day of writing this) Alibaba share is almost $140. That means the value of the share has grown more than 200% in those 3 years. A child can tell you that this is a successful company.
Uber IPO is a long-waited one after the tremendos success the taxi-hailing app has seen over it’s relatively short life. Many institutional and individual investors are itching to have it out already.
Etsy IPO rose to fame after it was surprisingly surpassed by its future pricing. The initial public offering was $16 a share but shortly it jumped almost 90% to $30. That caused a huge surprise in the financial market, however, the company performed miserably later on.
Of course a company’s IPO is really important to indicate where the company is at now in comparison to way back when it started, but you can’t completely rely on it for making trading decisions. You have to take in consideration other factors like the current financial well being of the company, its earning and above all, its chart.