What is an IPO, how are they priced and how do you apply?
An IPO is an Initial Public Offering, the first sale of stock by a company to the public, also known as a flotation on the stock market.
Why invest in IPOs?
The chance to get in on the ground floor of a company set for significant growth is what attracts investors to IPOs. Chinese e-commerce company Alibaba is one example. In 2014, its offering price was $68 and ended the day at close to $98 and it has reached highs of $195.
Not all IPOs succeed of course. Groupon’s offering at flotation in 2011 was $20 but a year later its shares were trading for less than $5. It is up to investors to exercise their judgement, research the company, its sector and prospects before committing to buy.
Whether the stocks perform well or not after launch, all investors benefit from zero commission and no stamp duty fees when they buy shares at IPO stage.
If you want to be one of the first to hear about IPOs and new issues, simply register for our free IPO service.
To sign up, log in to your account, visit ‘My Profile’ and select ‘Communication Preferences’ and subscribe to the ‘New issues and IPO alerts’ list.