What Is an IPO, and Should You Buy One? My Contrarian Take After 15 Years at The Fool.
IPOs get a lot of buzz, but they don't often pan out for investors.
Overview
IPO stands for initial public offering.
This is the process by which most companies enter the public markets, meaning their stock can be owned by a willing buyer. Start-ups and private companies typically go public with the help of investment banks, which underwrite the offering. The process takes several weeks. First, a company files a detailed prospectus, also known as an S-1, with the SEC, and then goes on a roadshow to pitch the IPO to investors.
Details
Shortly before the offering, a listing price, or what the IPO buyers are paying, is set based on investor demand, and then the stock begins trading publicly. Once it's listed on an exchange, it can be bought and sold like any other stock.
Source
Originally published at www.fool.com.