Volatility: Buckle Up
August 27, 2019
IPOs
Cash out
September 25, 2019
What’s an IPO?
An initial public offering, or IPO, is how a private company becomes a public company. IPOs can translate into big paydays for insiders and investors (or occasionally, big disappointments).
Fun facts about IPOs
- An IPO can offer the first chance for insiders to cash out of valuable ownership positions. That’s why Airbnb employees are pressuring the $30+ billion company’s top brass for an IPO. Much equity has been issued. No actual cash has been received.
- Manipulating the market is normally illegal, but during an IPO it’s routine and accepted. One job of an IPO’s underwriting investment bank is typically to keep the newly listed stock’s price up when it first starts trading—typically by buying shares as needed.
- The best-performing IPO so far this year? Beyond Meat (ticker symbol: BYND), which currently trades at more than $140 per share—about a 460% gain from its IPO price of $25.
- IPOs aren’t the only option. Spotify and Slack both recently became public companies through direct listings—a process that can avoid the hoopla and volatility of an IPO. Some in the industry say we need more of that, please.
