What is the difference between an IPO and a secondary offering?

An initial public offering (IPO) is the first sale of a company’s stock to the public. This is when the company decides to go from being privately owned to being publicly traded on the stock market. The IPO is the company’s way of raising funds for expansion and other activities, and it gives investors the opportunity to get in on the ground floor of a growing company. A secondary offering, on the other hand, is the sale of additional shares of stock after the IPO. This is done when a company needs more funds beyond what was raised in the IPO, or if stockholders want to cash out some, or all, of their shares. Secondary offerings also are done when underwriters need to create a liquid market for the stock. Both IPOs and secondary offerings of stock involve a company going public and offering its shares on the stock market. However, the two methods of going public serve different purposes. An IPO is the first sale of a company’s shares; it is the company’s way of raising funds for growth. A secondary offering is done to raise additional funds or to create a liquid market for the shares.

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What is the difference between an IPO and a secondary offering?

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