Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

More from IG

Start Trading Now

Search

No results found

View more search results

1 2 3 4 5 6 7 8 9 10

Related search:

Market Data	Type of market

See all Market data search results >

IPOs What are IPOs and how do they work?

More

What is an IPO and how does it work?

For most traders and investors, an initial public offering (IPO) is the first opportunity to gain exposure to a company’s shares. Learn more about the IPO process and how to take a position with us.

Discover IPO trading

Practise on a demo

Create live account

Call 0800 195 3100 or email newaccounts.uk@ig.com to talk about opening an account.

Contact us 0800 195 3100

Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.

Visit help and support for more information.

Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.

Visit help and support for more information.

Call 0800 409 6789 or email helpdesk.uk@ig.com if you have any questions about trading or investing. We’re available from 9am to 5pm (UK time), Monday to Friday.

Contact us 0800 409 6789

Call 0800 195 3100 or email newaccounts.uk@ig.com to talk about opening an account.

Contact us 0800 195 3100

Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.

Visit help and support for more information.

Get info fast via our instant help and support portal. Available for account queries, ProRealTime, product info and more.

Visit help and support for more information.

Call 0800 409 6789 or email helpdesk.uk@ig.com if you have any questions about trading or investing. We’re available from 9am to 5pm (UK time), Monday to Friday.

Contact us 0800 409 6789

What is an initial public offering (IPO)?

An initial public offering (IPO) is one of the methods that companies can use to go public – which will make its stock available to retail traders and investors. The company will decide how many shares it wants to offer, and an investment bank will suggest an initial price for the shares based on the predicted demand for them.

It should be noted that trading or investing in IPO shares can be riskier than getting exposure to established stocks, due to the unpredictability of the new listing.

Video poster image

Why do companies want to go public?

Companies want to go public for different reasons, depending on their circumstances. Most are looking to raise capital to fund expansion, pay debts, attract and retain talent, or monetise assets. A company may also want to list on a stock exchange to improve its public profile.

How does the IPO process work?

The IPO process starts when a company decides that it wants to sell its shares to the public via a stock exchange. First, an audit must be conducted, which considers all aspects of a company’s financials.

If everything is in order, the business then has to prepare a registration statement to file with the appropriate exchange commission, like the Securities and Exchange Commission (SEC) in the US or the Financial Conduct Authority (FCA) in the UK.

Next, the stock exchange that the company wants to list on will review the application, after which it’s either accepted – sometimes subject to certain amendments – or rejected. If it’s approved, the company will enlist the help of an underwriter to help it decide how many shares to issue and at which price.

The underwriter is usually a bank, and it’s their job to start a book building process, looking for investors to subscribe to (register their interest in) the IPO. Any interested parties will receive a prospectus of information about the shares, where they’ll be listed and the potential opening price.

The IPO will be the first chance for non-private investors to buy the company’s shares in what is known as the primary market – a transaction between the original holder (the company) and an investor.

Who sets the IPO price?

Investment banks set the IPO price. The company decides how many of its shares it wants to sell to the public and then the nominated investment bank does a valuation of the business. Once that’s done, an initial share price is released, and the public can start trading shares when the listing happens.

Discover our offering on IPO subscriptions and issues

Pros and cons of IPOs

Pros of IPOs

A successful IPO can raise huge amounts of capital, as becoming listed on a stock exchange can help to increase the exposure and public image of a company. In turn, the firm’s sales and profit can increase. IPOs are also beneficial to traders because it’s easier to buy publicly traded shares than those that only trade privately.

Cons of IPOs

Public companies are subjected to the rules and regulations of a governing body. One of the rules is that the company is required to publicly disclose financials, such as accounting information, tax and profits. IPOs also carry significant costs and could require the company to raise additional funding if its shares perform poorly.

Trading or investing in IPO shares can be riskier than getting exposure to established stocks, due to the unpredictability of the new listing.

How to trade or invest in an IPO

IPOs: what you need to know

Grey markets

If a company’s IPO has a lot of public interest, we may offer a ‘grey market’ before the IPO takes place. This’ll let you speculate on the company’s estimated market cap at the end of its first trading day – and the price that we quote will be based on our prediction for the company’s market cap.

You’ll ‘buy’ (go long) if you think the company’s market cap will be higher than the price shown
You’ll ‘sell’ (go short) if you think the company’s market cap will be lower than the price shown

When you speculate on IPO shares with us, you’ll be doing so by means of CFDs or spread bets. This gives you exposure to the share price without you taking ownership of shares in that company.

CFDs and spread bets are leveraged, meaning you’ll get increased market exposure for a small deposit – rather than paying the entire value of the position upfront. However, your profit or loss will be determined by the total size of your position and can far outweigh your deposit amount, often making trading IPOs higher risk than taking ownership of shares directly.

Create a trading account to access our grey markets

Primary market: buying at the IPO price

You can subscribe to the IPO ahead of the offering. By subscribing to the IPO, you’ll receive a stock allocation on the primary market, at the same time and price as institutional investors, in the primary market. This means you don’t need to wait for the secondary market to open in order to take your position.

Learn more about investing in the primary market

Secondary market: buying the stock after the IPO – investing or trading

Once an IPO is complete, you can start trading or investing in shares on the secondary market. With us, you’ll be able to:

Go long or short on share prices with spread bets and CFDs
Buy and own shares with share dealing

Remember, if you’re trading, you can profit from upward or downward share price movements. But if you’re investing in shares, you can only profit from rising share prices and dividend payments – if the company makes them.

Find out more about trading IPOs with our guide to taking a position before, during and after a listing

How do companies perform after their IPO?

The tables below show how companies’ share prices performed after the first day, first week, and first month of their IPOs.

First day
First week
First month

	2017	2018	2019	2020	2017-2020
All IPOs	8.6%	8.7%	8.5%	6.6%	8.3%
Main market	6.3%	5.7%	7.4%	4.6%	6.1%
AIM	11.2%	12.1%	10.7%	9.0%	11.2%

	2017	2018	2019	2020	2017-2020
All IPOs	9.3%	10.3%	11.0%	9.0%	9.8%
Main market	5.6%	4.8%	9.4%	4.4%	5.9%
AIM	13.6%	16.5%	14.3%	14.6%	14.7%

	2017	2018	2019	2020	2017-2020
All IPOs	8.0%	9.5%	13.9%	1.5%	8.4%
Main market	5.3%	2.8%	13.7%	-0.7%	5.2%
AIM	11.0%	17.3%	14.2%	4.2%	12.4%

FAQs

How long is the IPO process?

The length of the IPO process can vary, depending on how well it’s being managed and coordinated. The financial audit stage – which is the first stage of a company going public – can be the longest, especially if the company’s books are not in order.

To combat the time commitment of a traditional IPO, more and more companies are turning to alternative methods of going public, like SPACs – which can be considerably faster.

How do I find new IPO stocks?

To find new IPO stocks, you can look at our upcoming IPOs page – which has info on the most highly anticipated yet-to-list IPOs.

How much does an IPO cost?

The cost of an IPO for a company will depend on the registration requirements of the stock exchange where it’s being listed. In addition, there will generally be underwriting fees and offering costs, as well as legal and accounting fees. Larger companies could face additional costs when preparing to list.

How is the IPO price calculated?

The IPO price is calculated by an investment bank. First, the company decides how many of its shares it wants to sell to the public. Then, the nominated investment bank does a thorough valuation of the business. Once that’s done, an initial share price is released, and the public can start trading shares when the listing happens.

Develop your knowledge of financial markets

Find out more about a range of markets and test yourself with IG Academy’s online courses.

Try these next

What are shares?

Find out more about trading shares

IPO trading

Learn how to make the most of IPOs and grey markets

How to trade shares

Discover how to buy and trade shares

Markets

IG services

Trading platforms

Compare features

Learn to trade

News and trade ideas

Strategy and planning

Help and support

IG | Sitemap | Terms and agreements | Privacy | Cookies | Investors | Modern slavery act | Vulnerability

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. 

Professional clients trading spread bets and CFDs can lose more than they deposit.

Options and futures are complex instruments which come with a high risk of losing money rapidly due to leverage. They’re not suitable for most investors. Before you invest, you should consider whether you understand how options and futures work, the risks of trading these instruments and whether you can afford to lose more than your original investment.

Trading stocks and shares ‘on margin’ within a US options and futures account – meaning that you only finance part of the cost of acquiring a position in a security – carries additional risks over buying securities on a fully funded basis and may result in losses exceeding your original investment. Trading on margin will also result in additional costs to you as the investor and any securities purchased using margin may be held as collateral by the lender, restricting both your rights as shareholder, and your ability to use the securities until the margin trade is closed. You should familiarise yourself with these risks before trading on margin.

The value of shares, ETFs and other ETPs bought through a share dealing account, a US options and futures account, a stocks and shares ISA or a SIPP can fall as well as rise, which could mean getting back less than you originally put in. Past performance is no guarantee of future results. Some ETPs carry additional risks depending on how they’re structured, investors should ensure they familiarise themselves with the differences before investing.

Share dealing and IG Smart Portfolio accounts provided by IG Trading and Investments Ltd, CFD accounts and US options and futures accounts are provided by IG Markets Ltd, spread betting provided by IG Index Ltd.   

IG is a trading name of IG Trading and Investments Ltd (a company registered in England and Wales under number 11628764), IG Markets Ltd (a company registered in England and Wales under number 04008957) and IG Index Ltd (a company registered in England and Wales under number 01190902). Registered address at Cannon Bridge House, 25 Dowgate Hill, London EC4R 2YA. IG Markets Ltd (Register number 195355), IG Trading and Investments Ltd (Register Number 944492) and IG Index Ltd (Register number 114059) are authorised and regulated by the Financial Conduct Authority.   

The information on this site isn’t directed at residents of the United States, Belgium or any particular country outside the UK and isn’t intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

© 2003-2025

Careers | Marketing partnership