An IPO, or initial public offering, is the first time a company’s stock is available for purchase by the general public. Investors can make money on stocks that are likely to appreciate over time. A private company that has a handful of shareholders shares the ownership by going public by trading its shares. Through the IPO, the company gets its name listed on the stock exchange.

IPOs are appealing to most investors because they believe that share prices offered in an IPO are low, and if the company has growth potential, good returns can be expected out of such investments.