Question:
okay I know how the whole thing works they get money from investors to grow but every time I calculate the math I don't see how they are gaining much? SAY YOU have 5 stores and your going public and your going to use the money to build another 5 stores WELL you can base the stock price of the PROFITS of the five and THE number of shares and their EARNINGS or you can base a price of the potential of the other 5 stores right? OR IS THAT WRONG I need a description of how this wholse thing works
Answers:
I'm very confused.
It seems like you might be one of those people who think that stock prices are set in stone or have some formula to determine value - it doesn't work that way. It is a market system and people buy and sell based on what they think it is worth (usually by future earnings and growth).
An IPO is the first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.
In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market.
Also referred to as a "public offering".
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