What is an IPO? Why we should and shouldn't invest in an IPO.
                     WHAT IS AN IPO? 
WHY WE SHOULD 
AND SHOULDN'T 
INVEST IN AN IPO
What is an IPO? 
• Initial public offering or stock market 
launch is a type of public offering in 
which shares of a company are sold to 
institutional investors and usually also 
retail investors.
• An IPO is underwritten by one or more 
investment banks, who also arrange for 
the shares to be listed on one or more 
stock exchanges.
Source: 
Wikipedia
WHY WE 
SHOULD 
INVEST IN AN 
IPO
Source: Currency.com
REASON 1
• The IPO is an exciting time for a 
company. It means it has become 
successful enough to require a lot more 
capital to continue to grow. 
• It's often the only way for the company 
to get enough cash to fund a massive 
expansion. 
• The funds allow the company to invest in 
new capital equipment and 
infrastructure. It may also pay off debt.
Source: 
thebalance.com
REASON 2
• Stock shares are useful for mergers and 
acquisitions. 
• If the company wants to acquire another 
business, it can offer shares as a form of 
payment.
Source: 
thebalance.com
REASON 3
• The IPO also allows the company to 
attract top talent because it can offer 
stock options. 
• They will enable the company to pay its 
executives fairly low wages up front. In 
return, they have the promise that they 
can cash out later with the IPO.
Source: 
thebalance.com
REASON 4
• For the owners, it's finally time to cash in 
on all their hard work. 
• These are either private equity investors 
or senior management. 
Source: 
thebalance.com
WHY WE 
SHOULD NOT 
INVEST IN AN 
IPO
Source: quora.com
REASON 1
• The IPO process requires a lot of work. It 
can distract the company leaders from 
their business. That can hurt profits. 
• They also must hire an investment to 
guide the company as it goes through 
the complexities of the IPO process. 
Source: 
tradebrain.com
REASON 2
• The business owners may not be able to 
take many shares for themselves. 
• In some cases, the original investors 
might require them to put all the money 
back into the company. 
• Even if they take their shares, they may 
not be able to sell them for years. 
Source: 
thebalance.com
REASON 3
• Most people who get onto the IPO often 
look at the listing or short term gains 
they can make in the next few weeks 
and months. 
• In bull markets, this often happens. 
However, if you consider the long term 
performance of IPOs, most of them 
underperform their peers and the 
general market.
Source: safalniveshak.com
REASON 4
• A public company faces intense scrutiny 
from regulators including the Securities 
and Exchange Commission. 
• A lot of details about the company's 
business and its owners become public. 
• That could give valuable information to 
competitors. 
Source: safalniveshak.com