Glossary · Stocks and markets
IPO (initial public offering)
An IPO (initial public offering) is the first time a company sells its shares to the public, after which they trade on a stock exchange.
Also called: initial public offering, going public, flotation, public listing
Operating companies, Nov 2025 to Oct 2026, from SEC filings. Plus 186 SPACs.
1997. The quietest: 2009, with 47.
In plain words
A company usually starts small: its founders, their friends and perhaps venture capital funds own all of it. To raise a lot more money, or to let early owners sell, it can offer shares to everyone. That first sale to the public is an initial public offering, or IPO, and the company is said to “go public”.
Investment banks help set the price, find buyers and promise to sell the shares (they “underwrite” the deal) in return for a fee. Then the shares start trading on a stock exchange, and from that moment the market decides what they are worth.
IPOs come in waves. In the 12 months to Oct 2026, 141 operating companies went public in the US. In 1997 there were 442; in 2009, only 47.
Example
A company goes public
- A company files its prospectus with the SEC and plans to sell 20 million new shares at $18 to $20.
- Demand is strong, so the banks set the price at $21. The company raises 20 million × $21 = $420 million, minus the banks’ fee (often around 5% to 7% for a mid-sized IPO): roughly $395 million.
- On the first day the shares open at $27 and close at $26: a 24% “pop” for the investors who got shares at $21.
- For the company, that pop is money left on the table: 20 million × $5 = $100 million it might have raised at a higher price.
The IPO price is a negotiation; the first day of trading is the market’s first verdict.
One level deeper
Before an IPO the company files a registration statement (Form S-1 in the US, F-1 for foreign companies) with a full description of its business, its accounts and its risks; afterwards it must report every quarter. Early owners usually promise not to sell for a lock-up period, often 180 days.
There are other ways in. A direct listing puts existing shares on an exchange without selling new ones, and a SPAC (special purpose acquisition company) is an empty shell that goes public first and then merges with a private firm. SPACs boomed in 2021, when 596 of them listed in the US by our count of SEC filings.
Studies of thousands of IPOs found that on average they rose on the first day but then lagged similar companies over the next few years. Some became giants; many did not.
US IPOs a year since 1997
Operating companies that went public in the United States in each full year, counted from their SEC filings; SPACs, funds and REITs are left out. The dot-com years, the boom of 2020–21 and the quiet years after crashes stand out.
The numbers behind the chart
| Date | IPOs of operating companies |
|---|---|
| 1997 | 442 |
| 2000 | 340 |
| 2010 | 137 |
| 2020 | 214 |
| 2021 | 404 |
| 2022 | 90 |
| 2023 | 123 |
| 2024 | 157 |
| 2025 | 209 |
Why it matters
IPOs are how young companies raise large sums, and how their founders, employees and early investors can finally sell.
They let the public own fast-growing companies, though often only after much of the early growth has already happened.
Busy IPO markets are a sign of investor confidence, and sometimes of excess: record years have tended to come near market peaks.
A common mistake
Myth: IPOs are an easy way to make money.
In fact: In popular deals, small investors rarely get shares at the IPO price; they buy after the first-day jump. And over the following years many IPOs have done worse than the market: a few huge winners hide many disappointments.
Questions people ask
What does IPO stand for?
Initial public offering: the first (initial) sale of a company’s shares to the general public (a public offering).
Why do companies go public?
To raise money for growth, to let early investors and employees sell, and to get a public price for their shares, which helps when paying staff in stock or buying other companies. The price of all that is publishing their accounts every quarter.
How many IPOs are there each year?
In the US, 189 operating companies a year on average since 1997, by our count of SEC filings, with big swings: 442 in 1997, 47 in 2009.
Read more on BigCapital
About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- US IPOs a month: operating companies and SPACs: U.S. Securities and Exchange Commission, EDGAR full-index and filing headers.
- Counts start in 1997, the first full year after filing on EDGAR became mandatory for US companies (May 1996); foreign companies had to file there only from 2002, so some of their earlier US listings may be missing. The month still under way is left out until it ends.
- This page explains a term. It is not investment advice.