Financial Tips: What is IPO? Know The Importance of Initial Public Offering in Share Market

05 Nov, 2023 Author: Ayushee Joshi

Basics of IPO: An Initial Public Offering (IPO) is a significant financial and investment event. It is the process by which a privately owned corporation becomes public by first offering its shares to the general public. This entails the issuance of additional shares, as well as the sale of certain current shareholders’ holdings. IPOs may have a significant impact on a company’s trajectory as well as the larger stock market, making them an important part of the financial landscape.

Role of IPO in Company’s Profit-Loss

IPOs are a significant source of money for growing businesses, supporting R&D, or paying off debts. They enable firms to raise significant sums to support their development and innovation. Furthermore, going public via an IPO may increase a company’s legitimacy and visibility, gaining new investors and partners. It also serves as an exit plan for early investors and innovators looking to monetize their money. IPOs provide a chance for investors to participate in a company’s growth potential at an early stage. They do, however, carry higher risks because the market can be unpredictable and unclear during the early trading period.