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Investment
Initial Public Offering
The first time a private company sells shares to the public on a stock exchange, raising capital and creating a publicly traded stock.
The IPO process involves hiring investment banks to underwrite the offering — they help set the price, find buyers, and manage the legal requirements. The company files a prospectus with regulators (full disclosure of finances, risks, and business model) and goes on a "road show" — presenting to major institutional investors across the country to build demand.
IPOs create liquidity for early investors and give the company access to public capital markets. But they come with costs: quarterly earnings pressure, public scrutiny, compliance requirements, and volatile stock prices influenced by sentiment rather than fundamentals. Some companies (like Spotify) have opted for a direct listing instead — going public without the IPO process to avoid banker fees and forced pricing.