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Lesson 89 · Written for kid, teen, and little

Going Public: What an IPO Is

An IPO is the day a private company starts selling shares to the public.

The idea

IPO stands for initial public offering — the first time a private company sells shares to the general public. Before that day, only founders, employees, and a few big early investors own pieces of it. The company works with investment banks to pick a starting price, called the offer price, and files paperwork with regulators explaining its business and its risks. But once trading actually opens, buyers and sellers set the price themselves, and nobody knows yet what the crowd will pay — which is why first-day prices can jump or drop a long way from the offer price. 🔔

A

Words to know

5

IPO

Initial public offering: a company’s first sale of shares to the public. Before an IPO, private shares may exist, but access and resale rules differ from public-market trading.

Private company

A company whose pieces are owned by a small group. You cannot just go buy some — like a family restaurant nobody sells shares of.

Public company

A company whose shares anyone can buy or sell on a stock market. Apple and Nintendo are both public.

Offer price

The price the company and its banks agree on for the shares before trading starts. If the offer price is $20, that is what the first buyers pay.

Underwriter

An investment bank that helps a company get ready to go public and helps sell the first shares. Think of it as the company's guide for the big day.

Try it — no accountMatch the pairs

Four words you will hear whenever a company goes public. Match each one to what it means.

0 / 4 matched

In the full lesson

  1. 1Match the pairs
  2. 2Work out the number
  3. 3Make the call

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