Initial Public Offering (IPO)

Before an IPO, a company's shares are owned privately — by founders, employees, and early investors such as venture capital firms. Going public allows the company to raise fresh capital from a broad pool of investors and gives existing private holders a way to eventually sell their stakes. The shares then trade on an exchange like any other public stock, with prices updated continuously throughout the trading day.

The pricing process is managed by investment banks acting as underwriters. They gather indications of interest from large institutional buyers in a process called a roadshow, then set an official offering price. If demand turns out to be stronger than expected, the stock may jump sharply on its first day of trading — a phenomenon commonly called an "IPO pop." Conversely, a stock can also open below its offering price if sentiment shifts before trading begins.

A common point of confusion is the difference between the IPO price and the opening market price. The IPO price is what large institutional investors pay before trading starts; ordinary investors typically buy at whatever the market price is once the stock begins trading, which can already be significantly higher or lower. After the IPO, insider shareholders are usually subject to a lockup period restricting when they can sell. Current activity in public markets is tracked across stocks and shares pages.