What is meant by IPO? How do people make huge money through the listing of IPO’s in the share market?
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It is difficult to get into IPO’s without lots of money/connections. Say you have an account in Fidelity or E*Trade. They, along with other brokerages, get allocations for IPO’s (Initial Public Offerings) which they in turn give to their top/high net worth clients. Sometimes they rotate randomly in which case you might get lucky. The company sells 5% or 10% or 15% of its total stock in the open market as an initial public offering which gets priced say anywhere between $8-36 per share (or more/less) thus helping the company earn a valuation or market capitalization. Hot IPO’s such as Google, VMWare, etc. are over-subscribed and difficult to get into… but have surely been worth it for folks. I didn’t get into GOOG during IPO but did buy it on the open market the day it started trading at $85, $95, and $102… it’s done well since then. Hope this rambling comment helps you a little bit in understanding better… try reading up on IPO’s on Wikipedia and The Motley Fool websites.
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IPO = Initial Public Offering.
first sale of stock by a private company to the public
Historically, IPOs both globally and in the US have been underpriced. The effect of underpricing an IPO is to generate additional interest in the stock when it first becomes publicly traded. This can lead to significant gains for investors who have been allocated shares of the IPO at the offering price
IPO’s or (initial Public Offerings) are used when a company is just begging to release it holdings in the market. A low IPO value on a company stock could net you a huge net profit if it is well received in the market. If the company has a good history and a good PR dept and have done their research and advertising properly, and the word hasn’t hit the street about the IPO till the day it happens, this is usually a good bet.
HOWEVER I STRONGLY caution you, not to put you life savings into this, It’s possible that it will open slow or strong but close less then the opening bid, this my Friend would result in disaster for you. So if you have some investment capital, and some big kahunas you can make an attempt, but be careful this dog bite hard!
“IPO” stands for “Initial Public Offering.” Say a guy has a private company (like he owns it). The company has a net worth. He decides to go public. He offers to sell stock in it. Now watch this: He must set a selling price. Pretty tough to do - set it too low it won’t make the owner enough money; Set the price too high it won’t sell enough. Some IPO’s are successful, some aren’t. Another way money is made on an IPO is to buy it when it first opens on the market. If it goes up sell it. Big if.
IPO is a short for Initial Public Offer. It means that the company is offering its shares to public for first time. This is done to raise money for investment into their present business and to get the shares of their companies listed in stock exchange.
The rest of your question depends on in which country u live in. Like some one from usa has written that u need a lot of money and CONNECTION. It is not like that all. Connections do not help u get the allotment. But, of course , u do need oodles of money
Re making money it depends upron the good reputation of the company issuing shares and the market conditions at the time of listing of these shares in stock exchange.
for example I applied for 1875 shares of company A, But as a lot more people had also applied ( 6.6 times more than the number of shares available ) so we got only 286 shares. As the money for a total of 1875 shares had to me upfront, my money is blocked for about 21 days.
Upon listing if i sell these shares for a higher price than what I paid for to the company, I make money. that, in short, is how it goes. ( just a small example, not comprehensive )