Markets Explained: What to know about an IPO

29 Jun 2026

The blockbuster flotation of SpaceX saw great interest from investors to buy shares during the initial public offering (IPO), reflecting the attention in the company and investor appetite for share ownership.

Raising a record $75bn, SpaceX nearly tripled the previous listing record held by Saudi Aramco since 2019. And with further big-ticket names including OpenAI, Anthropic, and Stripe all expected to go public in 2026, opportunities for investors are plenty. But before grabbing a slice of the action, make sure you know the key facts about an IPO.

An initial public offering is when a private company offers shares to the public for the first time and becomes listed on a stock exchange, such as the London Stock Exchange (LSE), New York Stock Exchange (NYSE), or the Nasdaq. Shares in that company can be bought and sold in the public market by a range of investors, from retail investors with a share dealing or brokerage account to larger institutional investors such as mutual funds or pension funds.

A company typically goes public to raise capital for growth in areas such as expansion, product development, or acquisitions, while also offering early investors or employees the chance to sell some of their early-stage shareholdings. 

When preparing to go public, a company decides how much of the business to sell, which will dictate the number of shares that are available to purchase on the open market.

New shares can be created by the company to raise fresh money for its growth plans, while others can be existing shares sold by any current owners (founders, employees, or private equity investors).

The aim for a company is to have a sensible ‘public float’ ensuring there are enough shares to meet market demand, while also raising the capital required to carry out its growth plans.

The price of a company’s shares is influenced by a combination of factors, including comparison with similar listed companies, the financial outlook of the company, and tests of the market’s appetite.  The final price is set when there is deemed to be strong enough market demand to sell the planned number of shares.

Once available on the stock market, the price of shares can be volatile, particularly during the first days and weeks of trading. In general, a share’s price can go down or up due to many different factors:

Before purchasing shares, investors should ensure they are aware of the taxes that apply and consider their own personal tax situation. Stamp duty may be charged when shares are purchased, a dividend tax could be applied to any income received from shares, and capital gains tax could be payable when selling or giving away shares.

Newly listed shares can move sharply in the first days and weeks of trading as the market digests new information and demand settles, so there will likely be volatility in the price.

Many newly listed, fast-growing companies reinvest profits rather than paying dividends. If you’re investing for income, check whether the company has a dividend policy - and remember it can change.

When considering purchasing shares, think about how the investment fits within your wider portfolio, your time horizon, and your ability to tolerate ups and downs. As with any investment, you may not get back the same amount of money you put in.

Ultimately, focus on the fundamentals: how the IPO is priced, what drives share prices in the open market, and how the company may perform over the long term. Finally, remember that owning shares is an ongoing decision - staying diversified, understanding the risks, and keeping an eye on costs can help you invest with more confidence and less hype.