An IPO is a type of offering where shares of stock in a private company are sold to the general public on a securities exchange for the first time. Initial public offerings are used by companies to raise capital and to become publicly traded enterprises. A company selling shares is never required to repay the capital to its public investors. After the IPO, when shares trade freely in the open market, money passes between public investors. Although an IPO offers many advantages, there are also significant disadvantages such as the costs associated with the requirement to disclose certain information that could prove helpful to competitors, or create difficulties with vendors. Details of the proposed offering are disclosed to potential purchasers in the form of a lengthy document known as a prospectus. Most companies undertaking an IPO do so with the assistance of an investment banking firm acting in the capacity of an underwriter. Underwriters provide a valuable service, which includes help with correctly assessing the value of shares and establishing a public market for shares.
Regardless of the revenue downgrades, the price and quantity of Facebook's IPO were pushed up by bullish investors who were ignorant of the downgrades. The company went public on May 18, 2012 at $45 per share, but shares immediately sold off to settle around $38 per share. Facebook shares fell further, touching the $17 dollar range after the bad news was digested in the marketplace.
Have you suffered losses on your purchase of Facebook IPO shares? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.