A Beginner's Guide to the Stock Market

by Matthew R. Kratter

having insiders (founders, company executives, venture capitalists, and other institutional investors) sell some of their shares to the public, or by having the company create new shares that can be sold to the public.

IPOs allow insiders to cash out, while also raising money for a company to use to expand its operations.

IPOs usually have small floats and strong institutional support, at least for the first six months.

small float means that not all of a company's shares are available to be publicly traded.

A small percentage of an IPO’s shares are allowed to be traded on the stock exchange, while the rest of the shares are "locked up" an...