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What is an IPO? | CNBC Explains - Video học tiếng Anh
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What is an IPO? | CNBC Explains
What is an IPO? | CNBC Explains
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Subtítulos (52)
0:00
As the saying goes, ideas are a dime a dozen. Acting on an idea though, can make all the difference.
0:07
Say you turn your vision into a startup. It starts small. Then it gets even bigger.
0:12
Then it gets even bigger.
0:15
Until one day, you may get to decide it’s time for your company to go public.
0:23
IPO stands for initial public offering.
0:26
It’s the very first sale of a stock issued by a company on the public market,
0:30
which essentially means you’re turning your private company into a public one.
0:35
So, when it’s private, a company is normally owned by a small number of investors.
0:39
That usually consists of people like you, your friends or parents,
0:42
plus professional investors like a venture capital firm.
0:46
Once the company goes public, you’re opening up that business to be owned by a large number of people.
0:51
In effect, the firm goes from being owned by just a few people to potentially tens of thousands of shareholders.
0:56
To commemorate the event, most stock exchanges hold a ceremony of sorts.
1:00
At the New York and London stock exchanges, you’ll ring the bell.
1:03
At the Stock Exchange of Hong Kong, you’ll strike the gong.
1:08
So why go public? Well, going public raises a lot of cash for a company.
1:12
With that money, it becomes easier to scale and grow, invest in infrastructure and attract top candidates.
1:18
Plus, there’s the bragging rights you get from being listed on a stock exchange.
1:22
It’s important to note that large companies can also stay private too.
1:26
IKEA, Mars, Aldi and State Farm are just some examples of massive companies, that are private.
1:32
After all, going public isn’t a simple process, normally taking about four months to complete.
1:37
The company will start with finding what’s known as an underwriting firm,
1:40
typically an investment bank or several.
1:43
If and when the firm takes on the job, they put up the money to fund the IPO,
1:46
essentially ‘buying’ the shares before they’re actually listed anywhere.
1:51
The firm works with the company to determine what type of security to issue, an offering price,
1:55
the number of shares and the optimum time to bring a company to the public market.
2:00
In the U.S., they also handle registering with the U.S. Securities and Exchange Commission,
2:04
which makes sure all of the financial information has been disclosed and is accurate.
2:09
Then you’re finally good to go.
2:11
The underwriter’s goal is to sell shares to the public for more than it paid the company.
2:15
After all, that’s how they make their money.
2:17
But going public can also mean a nice payday for the business’ founders and early investors.
2:23
You often hear about people becoming millionaires, or even billionaires, after their company goes public.
2:28
Here’s why. If you’ve worked at a private company that’s intending to go public one day,
2:32
sometimes part of your compensation is given through equity, part-ownership of the firm.
2:37
It’s a way to hire talented people without a lot of cash upfront.
2:40
And if the company does go public, you get a piece of it at its new valuation. Here’s an example.
2:46
When Snapchat went public in 2017, its founder Evan Speigel scored big.
2:50
Speigel got a stock grant of $636 million when the company went public.
2:55
The following year, he sold more than 2.6 million shares. The sale of his stock was equivalent to $50 million.
3:03
The number of companies going public is constantly fluctuating.
3:06
Globally, 1,764 companies floated in 2017, a nearly 50% increase since 2016 and the most IPOs since 2007.
3:16
189 of 2017’s IPOs were in the U.S., a 70% increase from the year before.
3:22
A few of the biggest IPOs in history include Facebook, Visa, and General Motors.
3:27
And in 2014, Alibaba smashed the record, with its debut on the New York Stock Exchange bringing in $25 billion.
3:35
All that said, going public has its drawbacks.
3:38
Publicly traded companies are subject to oversight by regulators
3:41
like the U.S. Securities and Exchange Commission.
3:43
And once you list your company on an exchange, you’re not just reporting to yourself anymore,
3:47
you answer to all your shareholders.
3:49
If you don’t make them happy, you can be sidelined, or even fired, from the company you founded.
