IPO Analysis

IPO is the abbreviation of Initial Public offer, IPO is the situation whereby a company (called the issuer) issues common stock or shares to the public for the first time. The reasons for this IPO is for them to raise capital from member of the public to help them expand their business and to increase their return on investment.IPO are sometimes done by large privately own company so it is not for small companies only.

When a new company or a large privately own company shares is made available to the public during an IPO. The money paid by investors for the newly-issued shares goes directly to the company (in contrast to a later trade of shares on the exchange, where the money passes between investors). An IPO, therefore, allows a company to tap a wide pool of stock market investors to provide it with large volumes of capital for future growth and expansion. The company is never required to repay the capital, but instead the new shareholders have a right to future profits distributed by the company and the right to a capital distribution in case of dissolution.

An IPO can be a risky investment because the performance of the shares on the first day of listing cannot be predicted likewise the future of the company. Sometimes company performs well on the first day of listing but only to start going down maybe because of internal crisis within the company or the transitory period every company goes through.
  

        
  
  

  
  
  
   
  
  

  
  
  
  
    
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