IPOs, stock splits, bankruptcies and other company events, explained

IPO

An initial public offering is when a private company first sells shares to the public. It raises money and lets early owners sell. IPOs come with a prospectus describing the business and its risks. First-day moves can be large in either direction, and newly listed companies have little public track record, so research and caution matter.

Stock split

In a 2-for-1 split, each share becomes two and the price halves. Your total value is unchanged, as a $100 note swapped for two $50 notes. Companies split to make share prices more approachable. A reverse split does the opposite and is sometimes a sign a company is struggling to keep its listing.

Bankruptcy

When a company cannot pay its debts it may file for bankruptcy. Lenders and other creditors are paid first, and shareholders come last, often receiving little or nothing. Some bankruptcies are restructurings in which the business continues but old shares are cancelled. This is a major reason to avoid concentrating in one company.

Investing in startups

Private-company investing is illiquid, high-risk and often limited to approved investors or regulated crowdfunding offerings. Most startups fail. If you do it, use only money you can afford to lose entirely.

Corporate events change the shape of a holding, not always its value. Read the notice before reacting.