What is an IPO?

With the latest buzz around Facebook and its $104 billion valuation it’s time to make sure we all understand what it means when a company issues an IPO and goes public.

What is an IPO?

According to Investopedia an IPO or “Initial Public Offering” is the first sale of stock by a private company going public to seek capital to expand its business operations.  To further understand this process check out this video example.

Facebook Goes Public

The process that every business goes through when going public is a little bit different. In Facebook’s case they were selling millions of shares of stock and expected to raise over 16 billion dollars for the company.  Facebook’s IPO certainly has an opportunity to affect the daily lives of its 900 million monthly users.  Mark Zuckerburg has said that “Facebook was not originally founded to be a company. We’ve always cared primarily about our social mission…” Without a doubt Facebook wants to expand its business services and they felt an IPO was the best way to do that.

Private companies going public can be a huge success, but sometimes it doesn’t always work out for the best, check out the 5 Best and Worst IPO’s since the year 2000. Do you think going public will help make Facebook even better?

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Grant works for Collegis education and writes student-focused articles on behalf of Rasmussen College. He aims to inspire, motivate and inform current and prospective students.

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