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Glossary
Markets & macro

IPO

Initial public offering

The first time a company sells shares to the public.

An IPO is a sale, and it is important to be clear about who is selling and why. Insiders and early investors are choosing this moment, and they know more about the business than you do.

Companies float when conditions are favourable to sellers, which is by definition when conditions are less favourable to buyers. The long-run performance of IPOs relative to the market has historically been poor.

Figure

Who the first-day pop actually enriched

Offer price, £20Opens at £28You buy here£8 per share the company never receivedThen the lock-up expires and insiders can sell.

If the shares open 40% above the offer price, that 40% is money the company could have raised and did not. It went to whoever was allocated shares at the offer, which was not you.

Why it matters

It is how companies raise capital, and how early investors get liquidity.

The mistake everyone makes

Buying on day one in the excitement. There is rarely a reason the price will not be available later, calmer.

Related terms

Dilution
Your slice shrinking because the company issued more shares.
Market capitalisation
The total value the market puts on all a company's shares.
Lock-up period
The window after an IPO in which insiders are forbidden from selling.

See IPO on a real company

SteadyShares pulls this straight from the filings for 1,100+ companies, alongside moat scores, DCF fair value and peer comparison. Free to look around.

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