What is an IPO?

With much attention, Facebook recently offered an Initial Public Offering or IPO. Throughout the process, the media commonly used financial language many investors did not understand. I received multiple questions from clients about IPOs.

An initial public offering is the first offering of stock from a private company. Stocks, also called equity, provide investors the opportunity to own a portion of a company and participate in guiding the direction of the company through proxy voting. Most popular IPOs are only available to very wealthy individuals or institutional investors.

Many investors think of participating in an IPO as a quick way to make a large return. This stems from the time in the late 90s when “dotcom” IPOs could not lose. After the tech bubble burst in the years following, investors became careful investing in Initial Public Offerings. Investing in an IPO does not guarantee a profit. After the media hype leading up to Facebook’s IPO, the stock finished nearly flat for the day.

Kevin McNab

This article is written by Kevin J. McNab. Kevin is President of ACE Wealth Partners, LLC and is a CFP®, ChFC®, and CRPC®. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by ACE Wealth Partners, LLC unless a client service agreement is in place. If you have any questions regarding this Blog Post, please Contact Us. Please read our website DISCLOSURE carefully for additional information.