IPO: What is it and How to Invest in it

      Welcome to Bankboi.com a place where people learn about Money rules, Investment, and finance... Are you looking for IPO and IPO Related information? Well, here we are going to introduce IPO and important things related to IPO So let's Begin...  

     First Lets See what is IPO?  The answer is... An IPO is a short form of Initial Public Offering. Initial Public Offering (IPO) is when a company first sells shares to the public. IPOs happen when a company wants to raise money by selling shares, and this can be a great way for investors to make money. But how do you invest in an IPO? And what are the risks?  In this article, we'll answer those questions and more. We'll tell you what you need to know about IPOs and how to invest in them. We'll also discuss the risks involved and how to avoid them. So if you're interested in learning more about IPOs, Keep reading and continue...

What is IPO?

      As above said, IPO is An initial public offering (IPO) is the process of offering shares of a private company to the public in a new stock issuance. IPOs are often issued by companies looking to raise capital to expand their businesses. An IPO is often used by startups looking to raise capital and complete their business plan by selling off some of their shares to investors.

How to Invest in IPO? 

    To invest in IPO you need Demat and Trading Account. There are many platforms where you can open a Demat Account for Free. We would like to recommend you, a rapidly growing and reliable Trading Platform which is Upstox where you can create a Free Trading and Demat Account within a few minutes. To create a Demat Account you need PAN Card, Adhaar Card, Bank Statement, and Adhaar linked mobile number for OTP verification purposes. 

After creating a successful Demat Account now you can Invest in IPO

First Step - For this purpose first, you need to create your IPO Application, You can create it using Upstox App or through the website.
Second Step - Then Select an IPO whose application is open.

Third Step - You can Add up to 3 bids, within the price range.

Fourth Step - Now Confirm your application

The pros and cons of investing in an IPO

   Some of the pros of investing in an IPO include the potential for high returns, the chance to get in on the ground floor of a company, and the diversification it can provide. However, there are also some cons to consider. It is very important to know the pros and cons of investing in an IPO before jumping in.


  • IPOs are typically offered at a discount
  • IPOs are liquid assets
  • IPOs are a great opportunity for long-term and short-term investors.
  • IPO Gives yu the opportunity to earn great returns on an IPO.
  • You can buy shares at a lower price than the market price.
  • It’s easier to buy shares since there’s not as much competition.
  • You will usually have access to more information about the company.
  • IPOs are great for investors because they offer a large market cap and current growth, especially in industries that are expanding rapidly. You can invest early on the growth trajectory of the company. 
  • IPOs tend to have high-profit margins so you have the potential to earn double-digit gains from these stocks.
  • IPO stocks can go up in value - IPOs can be bought and sold quickly at much higher prices than an established stock, which makes them an excellent option for traders looking for quick returns or for people who want to move money into a new firm or sector. 

The above pros of IPO Show that An IPO offers some advantages over other options for startup companies, but it's not right for all businesses or investors.


  • IPOs seem to be risky investments
  • You won't know what the company is worth
  • Your stock might drop as soon as it gets listed.
  • You could pay more than other investors will pay.
  • You may feel pressure to buy.
  • The company may have very little information available about it, making it hard to know whether it’s a good investment or not.
  • There are a number of things to consider before investing in an IPO, such as the company's financial stability, the industry it operates in, and the risks involved.

How to evaluate an IPO before investing

  IPOs can be risky investments, as there is often a great deal of hype surrounding them and it can be difficult to know if a company is truly worth its valuation. However, there are some things that investors can look for when evaluating an IPO. Let's see...

  • First, know what the company does and where it does it. Understand the company, Evaluate the fundamentals.
  • Then it is important to look at the financials of the company. Analyze The company's financial health.
  • Evaluate products, services, and market share of the Company
  • Check the balance sheet of the Company 
  • Analyze the management team, Check the management and board
  • Before you invest in IPO, Do your own research.
  •  If a company is listed on an overseas exchange, look at the value of the currency in which its stock trades.
  • Determine whether your time horizon fits with the company's long-term goals.

Even though there is a lot of uncertainty surrounding an IPO, it's possible to use some tools to minimize your risk.

The risks and rewards of investing in an IPO

When a company goes public, it offers shares of itself to the investing public through an initial public offering (IPO). An IPO can be a great opportunity for investors to get in on the ground floor of a potentially high-growth company. However, there are also risks involved in investing in an IPO.

The biggest risk when investing in an IPO is that the stock price may be volatile in the short term. This is because there is often a lot of hype surrounding an IPO,

Risks Involved in IPO -

  • IPOs are generally riskier than buying shares of an established company. 
  • You're buying something without a proven track record.
  • IPOs may price their stock at a very high value, causing the stock to drop once it starts trading.
  •  The company might use your money for something other than what you were told it would spend it on.
  • Your broker or financial adviser may not be able to invest on your behalf.
  • You might not be able to sell your shares for some time after buying them
  • You could lose all the money you invest in an IPO.

Rewards investing in IPO - 

  • You make money by buying shares at the IPO price and selling them when they are listed on the exchange.
  • You get early access.
  • You achieve your financial goals.  

Conclusion - 

       Now you know what is IPO and how to invest in it.  IPO is a short form of Initial Public Offering. It is the first sale of stock by a private company to the public. IPOs are used by companies to raise capital, potentially expand their businesses, and become publicly traded companies. For investors, IPOs offer the opportunity to purchase shares of a company before it is listed on a stock exchange, which can provide the potential for profits if the company's stock price increases after it go public. To participate in an IPO, investors must have Trading and a Demat Account.  An IPO is not risk-free, but that doesn’t mean you should avoid them altogether, just do your research!

See Also...

How To Invest My Money Wisely

Post a Comment

Previous Post Next Post