πŸ“ˆ Economics

What is an IPO and why is it a big deal when a company goes public?

1 answers
Ismail JeilaniBSc Political Economy | Ex-Google | 7 years Teaching Experience 17.5k students helped

An IPO stands for "Initial Public Offering". When a company IPO's, you (and most other people) can buy and sell small pieces of it (called shares). Owning shares of a company means that they will actually share their profit with you. Target, Walmart, and Google are example companies (there are thousands). If you have one $700 share in Google, you will be entitled to a pro-rata share in their profits (about $22 per year). Companies sell these shares to raise money for projects, to make it easier to pay employees, and for other reasons. We call such companies β€œpublic companies”, and members of the public can buy or sell them.