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When a company embarks on an IPO (which stands for initial public offering) it goes public on a stock exchange. This can also be known as floating, flotation, or just ‘going public’.
IPO definition
Here, we define IPO in general investing and explain what it means to you when trading with IG.
What is an IPO?
When a company embarks on an IPO (which stands for initial public offering) it goes public on a stock exchange. This can also be known as floating, flotation, or just ‘going public’.
IPOs are one of many ways in which companies can seek to raise capital, with other popular options including finding major investors, crowdfunding or using retained earnings.
A successful IPO can raise huge amounts of capital: as Alibaba did in 2014 when it floated on the New York Stock Exchange and raised over $20 billion. However, IPOs also incur considerable costs and require the company involved to make itself fit for the public eye and its exchange’s compliance rules.
This all makes any float a costly consideration for a business. For traders, though, a float can be a great way of getting a share of a company the moment it hits the stock market.
With IG
We allow traders to speculate on the eventual value of some companies that are undertaking IPOs via our grey market offering.
Read more about share dealing
The value of shares, ETFs and ETCs bought through a share dealing account, a stocks and shares ISA, a SIPP or an IG Smart Portfolio can fall as well as rise, which could mean getting back less than you originally put in. Spread bets and CFDs are leveraged products and can result in losses that exceed deposits. Spread betting and CFD trading are not permitted within the IG SIPP. Please ensure you fully understand the risks and take care to manage your exposure.
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