IPO (Initial Public Offering)
When a private company first sells shares to the public.
An IPO lets a company raise money and lists its stock on an exchange, where anyone can then buy or sell it.
An IPO is the moment a private company first sells shares to the public and lists on an exchange. It raises money for the company and gives early investors and employees a way to cash out. The price is set with the help of banks, based on demand from big institutions in the run-up.
Newly listed stocks are notoriously volatile. There is little trading history to anchor a fair value, early hype can push the price well above what the fundamentals support, and lock-up periods that later free up insider shares can add selling pressure months down the line. Plenty of traders wait for a few quarters of results and a calmer chart before touching a fresh listing.