1048 – Launching an Initial Public Offering
Zoe: What are you looking at?
Midas: It’s the prospectus for Boogle’s IPO. I wish I could get in on the initial public offering, but since I can’t, I’ll buy stock as soon as the company becomes publicly traded.
Zoe: I’m not really familiar with how the stock market works. You mean you’re going to buy shares in Boogle?
Midas: That’s right. An IPO is a way for a privately owned company to become a publicly owned one. The owners of the company do it to raise capital, or sometimes it’s for early investors to cash in.
Zoe: Why can’t you buy stock in the initial public offering?
Midas: A company like Boogle works with an underwriter, like a major investment bank, to help set the share price and to find buyers for the initial offering.
Zoe: Okay, I’m following you so far.
Midas: Well, that first sale of stock is usually done in bulk, and I don’t have a few million dollars lying around to buy that much stock. Luckily for me, those first buyers then turn around and sell that stock in smaller amounts.
Zoe: And that’s when you’ll buy.
Midas: That’s right. You should get in on it, too.
Zoe: You mean buy some Boogle stock?
Midas: Sure, why not?
Zoe: And risk losing my shirt? No, thanks!