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An initial public offering (IPO) is the first sale of stock by a private company to the public. It’s often called “going public”. You can learn about why companies go public on GetSmarterAboutMoney.ca.

IPOs may be more risky than a stock that’s been on the stock market for a while because they typically have limited history, and you should always do your homework. Before you decide, it is important to get some information into how the company works. To get some information, investors can read the prospectus from the company issuing the IPO. The prospectus describes the business plan and notes important risk factors. Check whether the company is making money or when it expects to become profitable. This document can be found on the System for Electronic Document Analysis and Retrieval (SEDAR).

Information on upcoming IPOs is relayed through stock exchanges where the stock will be sold, through brokers, newspapers, and new filings on SEDAR. Always check the registration of any firm or individual who offers you an IPO. You can do this by visiting CheckBeforeYouInvest.ca.