IPO – Initial Public Offering

What is an IPO?

An initial public offering (IPO) of shares of a company's stock for the first time.

When a company seeks to expand its business, it may offer shares of stock to the public to raise capital. Larger privately owned companies may also issue an IPO to begin public trading. When a company decides to go public, shares of the stock are listed on a stock exchange, where the IPO is first issued. To create an IPO, a company goes through the underwriting process to determine the prices of the shares. As of 2014, the largest IPO in history came from Alibaba Group Holding Ltd., which raised US$25 billion.