Understanding the Stock Market

Why Companies List

The most fundamental reason as to why a company lists on a stock market is to raise money. Companies often use the money to fund operations to meet their goals in growing the business.

Another reason as to why a company lists on a stock market is that it allows the early-stage investors to exit the company. They can simply sell their interests in the company and move on.

When companies list on the stock market, it’s called an ‘initial public offer’, often known as an IPO for short. A key benefit of an IPO is that there is a lot of publicity, which can boost public relations.

Investors should be wary of IPOs because they can be used to create a lot of hype for a company. This hype can artificially push up the stock price of a company – which can then go down in the weeks after.

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