Initial Public Offering (IPO)
A company's first sale of stock to the public.
What is Initial Public Offering (IPO)?
A primary offering, so the proceeds go to the issuer. Registered under the Securities Act of 1933, with a cooling-off period during which only a preliminary prospectus (red herring) may be distributed and indications of interest taken. Underwriters price and distribute the shares.
Initial Public Offering (IPO): a worked example
A private software company sells 20 million new shares to the public at $18.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.