At some point in our lives, we all have heard a giddy TV pundit or news anchor talk about a popular tech company completing their “IPO” into the stock market. Recent listings include Uber, Lyft, Snapchat, and Pinterest. But what is an “IPO” and what should be considered before buying a newly listed stock?
An IPO, or initial public offering, is when a private company lists their shares on the public exchange, such as the NYSE or NASDAQ. At this point, the company is considered a public company and investors, such as yourself, are now able to buy shares. But, should you?
There are many things that should be carefully considered before investing in an IPO:
As always, a conversation with your financial advisor is prudent before taking a large position in any investment – especially newly listed securities.