What is an "IPO"?

An IPO, or Initial Public Offering, is the process by which a private company sells shares of itself to the public for the first time, listing on a stock exchange so ordinary investors can buy in. This transition lets the company raise large amounts of capital in a single event and gives early employees, founders, and private investors a way to finally convert their ownership stakes into cash, since private shares are normally hard to sell.

A new product launch is simply a company releasing a product to customers, with no connection to selling company ownership on a stock exchange. An internal staff promotion involves an employee's job title or role changing, an entirely unrelated corporate event.

Because IPOs can generate enormous publicity and sudden price swings, some of the most anticipated ones see their share price jump sharply on the very first day of trading, though that early excitement doesn't always predict how the stock performs over the following months or years.