IPO full form is simple – Initial Public Offering.
But what does it mean? Each word in this full form has a specific meaning and that is why it is abbreviated as IPO. Let’s break it down to understand the gist of this technical term, especially for beginner level traders.
Initial implies something that is at the onset, at the start, in the beginning.
Public means this particular term has something to do with people, common public on the roads, you, me, anyone.
Offering implies there is something to offer, to be given. Since we are talking about the stock market, it obviously will be something related to finance.
Now, this needs to be understood that an IPO is launched by a company, a business – most of the times small or medium, few times it is a big name. Thus, if put in other words, with an IPO, a small business is coming out to the public – to offer a financial product – that is obviously related to his or her company.
Now, when a company is offering something, they will need something in return as well.
Thus, going relatively technical, with an IPO, a business looks to raise monetary funding from the general public in exchange for a share in the business (the financial product!).
Full form of IPO has been kept aptly and with precision so that it is self sufficiently understood.