What is an IPO (Initial Public Offering)?

IPO stands for Initial Public Offering. It is the moment when a company offers its shares to the general public for the first time. Before the IPO, the company is private, meaning its shares belong only to founders, early employees, and select investors. With the IPO, the company's shares start being trading on the stock exchange, allowing the company’s shares to become available to public investors through the capital markets.

A primary objective of an IPO is to raise capital for the company. It also establishes a public market for the company's shares, giving founders and early investors an opportunity to increase the liquidity of their investments and eventually sell their stakes.