Going public has pros and cons for a company

Why companies go public

There are many ways the founders of private companies can make money off an exit. They could sell the company to a larger organization, for instance. But there are unique benefits to having a company listed on the stock market that aren’t often outlined in news alerts about IPOs.

Initial public offering (IPO) is the term for when a company goes public

When a company completes its IPO, it's no longer a privately owned organization. Anyone can invest in the company by buying its shares on the stock market—opening up ownership of the business to the general public.

An initial public offering or 'IPO' is the process of a private company becoming public by putting shares of the company on the stock market for purchase.

An initial public offering is how a private company becomes public

This milestone requires plenty of preparation, starting with the SEC's S-1 registration, revealing key details about the company's finances and strategy. Investment bankers set valuations, secure long-term investors, and finalize share pricing before the public launch. IPOs provide companies with significant capital, but also demand transparency and invite public scrutiny.

It's difficult for individual investors to purchase IPO shares

Although the process of going public means the general public can invest in a company, the initial investment period is different. Before individual investors get in on the action, investment bankers sell the shares to larger financial institutions who can afford the asking price and risk associated with an IPO.

A list of public companies' filings

To go public, a company has to file a registration statement with the US Securities and Exchange Commission, also known as the SEC. You can find these filings on the SEC’s website to learn more about a company’s share pricing before its IPO date.

Learn how to read a prospectus, the juicy document that any company must file with the SEC before going public

A prospectus typically contains information about the company's operations, including details about its management team and their compensation, financial statements, how it intends to use any capital raised by the IPO, and more. While these documents can be dense and lengthy, experts say that some of the most important sections of a prospectus for investors to look at include the risk factors section and the use of proceeds section.

The number of publicly traded companies has decreased in recent years

In 1996, more than 7,300 companies traded publicly on US stock markets, but that number has recently dropped to 4,300. Economists point to two reasons: First, going public requires full disclosure of operations, exposing it to scrutiny from investors, competitors, and analysts. Second, the IPO process is expensive and time-consuming.

Pros and cons of pay transparency

While the benefits of pay transparency may seem plentiful to some, there are a few less obvious downsides. For instance, some argue companies that implement pay transparency could end up hiring fewer people or pitting employees against each other. For a full list of perceived pros and cons of pay transparency, click here.

Learn how to read a prospectus, the juicy document that any company must file with the SEC before going public.

Just because a big name company is going public doesn’t guarantee a successful stock

A reporter dove into how highly anticipated IPOs can still be risky, and why retail investors should be wary of investing right away.

A direct listing is when a company goes public, listing shares on a stock exchange

A direct listing is when a company goes public, listing its shares on a stock exchange, rather than issuing new shares or raising capital. That means investment banks—traditionally serving as intermediaries—could lose out on some of the profits from these deals as more companies like Spotify opt for direct listings.

IPOs that failed

Plenty of private companies fail once they try to go public. Failing can mean shares sell for less than their initial asking price on its IPO date, or it can look like a company pulling out of the IPO process at the last minute. Some companies with failed IPOs include Pets.com, Etsy, and Robinhood. Learn more about these companies and others here.

Robinhood's mission of democratizing finance included its IPO

In 2021, investing app Robinhood went public—and decided to go about its IPO process differently. Unlike other companies, it opened up its IPO for the general public to purchase right away. A podcast episode explains what made Robinhood's IPO so unique prior to its launch date.

Ride along on one coffee company’s journey through the stock market

From going public with an initial public offering, to struggling with how negative news coverage impacts a stock’s value, this video lets you put yourself in the shoes of a newly public company. This makes learning about the inner workings of the stock market much easier.

Read about the day Palantir went public in 2020

After more than 15 years in business, Palantir held its initial public offering (IPO) via a direct listing—meaning the company didn't rely on underwriters to assess the initial trading price or stock value. Palantir's stock ended the day trading 31% higher than the reference price.

Special-purpose acquisition companies let companies skirt the IPO process

A video explains how private companies have taken advantage of this loophole, why investing in these companies isn’t always a good idea, and how blank-check companies (as they’re commonly called) work.

Shares are parts of a stock that represent ownership of a company

Shares are traded on the stock market. Once you buy a single share of a company, you are considered a shareholder of that company and may have certain rights as a partial owner, such as voting on business decisions.

Private equity firms can be 'powerful partners' or 'formidable competitors'

Under the best circumstances, PE firms can increase a company's value using strategies that might not be suitable for public companies facing pressure for immediate shareholder returns. But PE firms are often portrayed negatively due to the aggressive strategies they sometimes use to cut inefficiencies. As PE has grown, many firms have changed their strategies, shifting away from aggressive scaling to more integrated acquisitions.

SpaceX's S-1 or 'prospectus' revealed many previously unknown details about the company, including its unprofitability despite doing $18.7B in revenue in 2025, exactly how many voting shares Elon Musk will have in the company (roughly 85%), and more.

Listen to the pros and cons of owning a trademark as a small business owner

For many small business owners, it can be hard to decide when the time is right to file a trademark. This trademark lawyer says the decision often comes down to a product's branding, the size of the business, and how established the company is.

Startup founders’ equity becomes diluted as they bring in more investors

When an angel investor funds a company in exchange for equity, startups issue new shares to them, rather than giving them existing shares, and boost the company’s valuation.

The pros of exchange-traded funds include ease of access through brokerage apps and retirement savings accounts

One unexpected perk is that ETFs are typically associated with lower capital gains tax requirements. Read this list to learn more about the benefits of investing in ETFs.

Bumble went public with an IPO in 2021

That year, Bumble Founder Whitney Wolfe Herd became the youngest female CEO to ever take a company public. The company pivoted during the 2020 COVID-19 pandemic lockdowns, focusing its marketing strategy on promoting social-distanced dating and its video chat features.

Investing in bonds comes with a few risks

Think: changes in interest rates that impact the bond’s value, or a bond issuer completely defaulting on a loan. There are steps investors can take to lower their initial and future risk when investing in the bond market, such as checking a company's bond rating before investing.

Elon Musk joined Tesla in 2004, investing $30M and becoming chair

The company went public in 2010, raising $226 million in its IPO just two years after beginning production on its first car. Tesla's first Supercharger stations were launched in 2012 with six locations in California.

The pros and cons of long-term renting

Soaring mortgage rates and inflated home prices have led more consumers to opt to rent instead of buying, becoming “forever renters.” This article weighs the costs and benefits of renting instead of buying. Benefits include flexibility, less upkeep, and potentially lower expenses, while downsides include less stability and reliance on landlords. Read this article and decide whether homeownership or renting is the choice for you.

Economists warn that private schools can negatively affect public schools

Lower public school enrollment often means less public school funding. Private school parents, however, frequently argue that public schools simply aren’t offering the right education for their children. This podcast episode investigates that back-and-forth in San Francisco, where 30% of children attend private schools, nearly three times the national figure.

Venture capital is a form of funding provided to early-stage companies with high growth potential, typically in exchange for an equity (or ownership) stake

While the first exchange-traded fund (a 'basket' of different assets that can be bought and sold on a stock exchange) in the US only launched in 1993, the global ETF market has grown to more than $10T in the short time since.

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