FPO Vs IPO And What Is The Difference

FPO Vs IPO And What Is The Difference

New IPOs are beginning to storm the market lead by the highly anticipated IPO of Facebook.  This has prompted a number of questions from your readers regarding what the difference between and IPO and A FPO exactly where.  FPO and IPO are initials that have more to them than meets the eye. FPO stands for follow up public offering while IPO stands for initial public offering.  Depending on what type of return and what you are looking to get out the investment will determine which one you would choose.

FPO Vs IPO And What Is The Difference: What Is An IPO

An IPO is issued when a company decides they want to go public and will offer shares to the public in return raising capital for the company.  This can be seen with Facebook as they are trying to raise around 100 billion dollars of public money.  IPOs can be very risky as the company is not neccessaryly proven yet and the scrutiny of being  a publically traded stock can have its affect on the company.  Although sometimes risky there is also a great deal of money to be made on IPOs if you choose right.  Just look at Google which sky rocketed from its IPO price although this was helped by a great tech bull market for a few years.

FPO Vs IPO And What Is The Difference: What Is An FPO

An FPO is  a follow up public offering which is usually issued when a company wants to raise a second round of capital.  These can signal two different outcomes to the market, such as the company is struggling and needs more cash or they are growing and want to take advantage of the opportunities in the market.  Generally speaking FPOs are safer investments as you will know the companies track record and what you are going to be getting yourself into before you purchase the existing shares.