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Understanding the Initial Public Offering of Stock Lingo
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IPO, IPO, IPO.
It is a three letter acronym that has insignificant meaning to English critics (since it does not suggest any idea at all at first glance), yet a golden opportunity for investors in raising the working capital of their business. What is IPO, its attributes, and its implication to the business community (Investors have the interest to the subject; never mind the English critics)?
IPO is commonly known within the walls of the business community as “initial public offering”. At first glance, you will not have any idea of what it means, and what it is for. The English critics are right: IPO or even initial public offering does not suggest anything of importance to the English grammar. However, we are not talking about grammar here. We are talking about BUSINESS and CAPITAL.
Initial public offering refers to the initial sale of a company’s common stocks to the public. When you say “initial sale”, it is the first sale of the common stocks. Therefore, any later sale of common stocks after the IPO process will now be referred to as a secondary market offering. So the next time you will be able to meet a company that offers you a secondary market offering on their common stocks, you can presume that company already undergone an initial public offering of their common stocks.
What are the attributes of IPO? Let us take a look on the lingo that is used when company goes public:
• Underwriters- these individuals or groups does not “write under the paper’ or any literal meaning. In IPO, it refers to a group of investment banks that will offer the common stocks for sale on interested investors.
• Syndicate- definitely, there are no criminals involved in the process. Syndicate here refers to a group of major investment banks that underwrite the IPO of multinational companies. In other words, “syndicate” and “underwriters” refers to the same group of investment banks. The only difference is the former underwrites large IPOs while the latter underwrites small and medium-sized IPOs.
• Securities Act of 1993- this Act serves as the governing rules and regulation of IPO process. It is also known as the “Truth in Securities Act” which has two primary objectives: (1) the investors must receive financial and other essential information concerning securities being offered for sale to the public, and (2) rule out deceit, misinterpretations, and other forms of fraud in the public sale of such securities.
• Prospectus- it contains the overview of the company’s history, finances, industry background, and other related information. The U.S. Securities and Exchange Commission (SEC) is tasked to scrutinize every IPO prospectus that will be attached on every offer of common stock for sale.
• Gun-Jumping- no Beretta jumps around the process. It refers to the prohibition applied to the issuer (the company that sells common stocks) and underwriters regarding any kind of public offering.
• Free Riding- it refers to the stocks offered to the public for sale through various ways. This is the period where the underwriters will now be on function.
Understanding the initial public offering lingo will definitely help you appreciate it. So the next time you will come across the term IPO, you already know what it is and you will be able to understand news concerning the IPO process.
Remember, this is not a grammar subject. It is all the subject of BUSINESS and CAPITAL.
Initial Public Offering Ipos News
Shareholders sue Facebook over botched IPO
Facebook is facing a lawsuit from angry shareholders and multiple probes from regulators over the disappointing handling of its initial public offering last week.
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Morgan Stanley on Tuesday defended its handling of Facebook's initial public offering after reports surfaced that the company failed to warn retail investors days before the IPO that earnings estimates were falling...
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Facebook's lackluster initial public offering performance is a black eye for many on Wall Street and could have ramifications for similar upcoming deals such as an offering by Twitter, but venture capitalists ...
Read more...Regulators, investors turn up heat over Facebook IPO
(Reuters) - Two top U.S. financial regulators said on Tuesday the issues around the initial public offering of Facebook should be reviewed, putting fresh pressure on the company, its lead underwriter, Morgan Stanley, and the Nasdaq stock exchange. Facebook shares closed 8.9 percent lower at $31, following an 11 percent plunge on Monday. At that price the company has shed more than $19 billion in ...
Read more...Lawmakers probing possible violations in Facebook IPO
Washington — Two congressional committees are looking into the troubled initial public offering of Facebook Inc., aides said Wednesday.
Read more...Facebook Initial Public Offering: How The Social Network Compared To Hot Tech IPOs Of The Past Year
At this point, there's no question -- Facebook is among the hottest IPOs ever. With the announcement Thursday that the world's largest social network priced its common stock at $38 per share and will raise $16 billion, it instantly not only became the biggest tech IPO ever, but the third biggest IPO in history , according to the AP.
Read more...Facebook CFO could be in trouble after boosting size of IPO at last minute: report
Less than three days before Facebook's initial public offering (IPO), Chief Financial Officer David Ebersman decided to boost the number of shares the company would offer investors by 25 percent, people familiar with the planning said Wednesday. His main adviser at lead underwriter Morgan Stanley assured him there was...
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