An Initial Public Offering (IPO) is the when a company chooses to go public. By going public, it means that its shares are available for sale on various Exchanges and available for purchase directly by the public. When a company sells its shares through a securities exchange for the first time ever, it is called its IPO. This selling is generally to the institutional investors who further sell it to the common man. Any investor, who buys shares, seeks information about that company before buying. This is the stage when the company has to disclose its key information to the public that disclosures its financial statistics. The objective of most IPOs is to raise capital for further expansion and release the initial investors of the most of the burden that they bear through the initial process. The investors are not guaranteed any return. They have to bank on their instinct. If the company grows, then the share holders’ make profit by selling shares. Underwriters generally help a company go public. They help the company calculate the net worth of their shares and the offer price with which the company should go public.
Alibaba released its IPO on 5 September 2014 in USA. The expectation was to raise $20 billion through this. On September 18, it first raised $21.5 billion. However, on September 22, Alibaba’s underwriters for the IPO announced that they will release more shares to raise the initial expected amount to $25 billion. The IPO over achieved its initial target of $ 20 billion and beat Facebook to become the largest in the history of United States of America. Though Alibaba is generally known across the globe, buyers still had their concerns about buying the companies stock. Alibaba had the advantage as it combined the services of several leading MNCs like eBay and PayPal. Started in Dec 1998, Alibaba was raised from humble beginnings and it now on the verge of creating history. However, it had raised millions of dollars before the year 2000 from various investors including Goldman Sachs, Softbank and others. In June 2014, it has also acquired a Chinese mobile internet firm. The company has claimed it to be the largest mobile internet firm in Chinese history although the actual cost of the acquisition has not been disclosed. After all has been said and done, it remains true that Alibaba still earns the majority of its profits from the domestic Chinese market.
When Facebook went public, it broke several records for the information technology industry. In fact, it was the biggest IPO in internet history, leaving behind even Google. The initial capitalization was to the tune of 104 billion dollars.
Facebook went public on May 18, 2012. Until then, Mark Zuckerberg, its founder, had steered clear of going public despite the suggestions of several pundits. Although, by then, the company had been selling its stocks to several multi-national corporations like Microsoft and Digital Sky Technologies. During its first filing of the IPO in Feb, 2012, the company claimed of having 845 million users worldwide. Looking at the demand in market, the company sold more shares than it had planned. The company also set new records in the internet arena that year. Several analysts had predicted a moderate response from the market. Undaunted from this prediction, the company went on to become a market leader and trend setter in the IPO. Despite all this, the company set a new record of trading over 450 million shares and raised $ 16 billion thus making it the third largest IPO in the history of the United States.
Larry Page and Sergey Brin, both of whom Ph.D. students with University of Stanford, would have never thought in their wildest dreams that a company that was instituted in a very humble background would go on to making history. The internet arena was taken by storm ever since both of them began their research project in the early 1990s. Though initial funding was hard to come by, when the company went public, it was raining dollars for them. The initial investment received from a founder of Sun Microsystems before the IPO was to the tune of $ 100,000. However, once the IPO was released, the company has never looked back.
The Initial Public Offering for Google was released on Aug 19, 2004. The company had hired Goldman Sachs and Morgan Stanley to arrange for it. The company expected to raise $4 million, however, the IPO raised $ 1.67 billion and made the initial investors of the company millionaires. Close to 20 million shares were floated in the market at a price of $ 85 per head. Presently, the company is listed on NASDAW under the symbol GOOG.