IPO vs Shares: Understanding the Differences and Making Informed Investment Decisions

IPO Vs Shares: IPO Vs Shares: Understanding The Differences And Making Informed Investment Decisions

Investing in the stock market offers a range of opportunities for individuals looking to grow their wealth. Two common investment options in the market are Initial Public Offerings (IPOs) and shares. Check our guide to know How to Buy IPO Stock. While they may seem similar, there are key differences between IPO vs shares that investors should understand to make informed investment decisions. In this blog post, we will explore the nuances of IPO vs shares, highlighting their characteristics, advantages, and considerations. By the end, you will have a clearer understanding of IPO vs shares, enabling you to navigate the investment landscape more confidently.

IPOs: Opening Doors to Public Investment

When a private company decides to go public, it offers shares to the public through an Initial Public Offering (IPO). An IPO marks the first time the company’s shares become available for trading on the stock market. Here are some key aspects to consider when it comes to IPOs:

Fresh Issuance of Shares: In an IPO, the company issues new shares to the public. These shares are typically offered at a fixed price determined by the company and its underwriters. Investors participating in the IPO have the opportunity to purchase shares directly from the company.

Knowing the list of new IPOs becomes essential for individuals aiming to enter the stock market and invest in upcoming IPOs.

Growth Potential: IPOs often involve companies that are relatively young or expanding rapidly. These companies aim to raise capital to fund growth initiatives, such as expanding operations, investing in research and development, or paying off debts. Investing in an IPO provides an opportunity to become an early shareholder in a potentially promising company.

Market Volatility: IPOs can be accompanied by market volatility due to the uncertainty surrounding a new company’s future performance. The share price may experience significant fluctuations in the early days of trading, influenced by market sentiment and investor perception.

Shares: Trading on Established Markets

Shares, on the other hand, represent ownership in an already public company. Here’s what you need to know about shares:

Trading on Secondary Market: Shares are bought and sold on stock exchanges, such as the New York Stock Exchange (NYSE) or NASDAQ. These exchanges provide a platform for investors to trade shares of established companies, including large corporations with a track record of performance. Unlock the Potential of Companies’ Unlisted Shares

Liquidity and Price Discovery: Shares on the secondary market offer higher liquidity compared to IPOs. Investors can buy and sell shares at prevailing market prices, which are determined by supply and demand dynamics. This liquidity allows investors to enter and exit positions more easily.

Historical Performance: Shares of public companies often come with a track record of financial performance. Investors can analyze past financial statements, quarterly reports, and other data to assess the company’s stability, growth potential, and profitability. This information can help investors make more informed decisions based on the company’s historical performance.

IPO vs Shares

Definition

Let’s begin our quest by delving into the essence of IPO and shares. An IPO marks the moment when a private company decides to go public, offering its shares to the general public for the first time. It’s like the grand opening of a captivating play, where the curtains rise, and the company steps onto the public stage. On the other hand, shares, often referred to as stocks or equities, represent ownership in a company, allowing individuals to participate in its growth and prosperity.

Objective

The objectives pursued through IPO vs shares are distinct yet intertwined. An IPO aims to raise capital, fuel expansion plans, enhance brand visibility, and provide an exit opportunity for early investors and founders. It’s a moment of transformation, turning dreams into reality and paving the way for future success. Conversely, investing in shares enables individuals to become shareholders, sharing the company’s fortunes and seeking financial growth through capital appreciation and dividends.

Price

When it comes to pricing, IPO vs shares follow different paths. In an IPO, the price is determined through meticulous evaluation by investment banks, underwriters, and market conditions. The initial offering price is often influenced by factors such as the company’s financial health, growth potential, industry trends, and investor demand. In contrast, share prices in the secondary market fluctuate based on supply and demand dynamics, investor sentiment, and the company’s performance, reflecting an ongoing dialogue between buyers and sellers.

Profitability

The pursuit of profitability lies at the heart of both IPO vs shares. For companies going public, profitability is a key metric as investors seek assurance of sustainable growth and returns on their investment. Track the IPO performance of the Mainline IPOs by comparing their listing price to the IPO price. However, investing in shares offers a different dimension of profitability. Shareholders participate in the company’s success through capital appreciation, where the value of their shares can rise over time. Additionally, some companies distribute a portion of their profits as dividends, providing investors with a regular income stream.

Issuer

While IPOs involve private companies transitioning into the public domain, shares can be traded on stock exchanges by both public and private entities. IPOs typically involve emerging companies aiming to expand their reach and invite public participation, while shares encompass a broader spectrum of companies across various sectors and stages of development.

Risk Factors

Every investment journey has its share of risks, and both IPO vs shares come with their own set of considerations. In an IPO, investors face the risk of market volatility, uncertain demand, and potential gaps between expectations and reality. In contrast, investing in shares entails market risks, company-specific risks, economic factors, and changes in industry landscapes. Conducting thorough research, understanding risk profiles, and seeking professional advice can help mitigate these uncertainties.

Share Capital

When a company undergoes an IPO, it issues new shares, expanding its share capital and inviting new shareholders into the fold. This infusion of capital empowers the company to fund its growth strategies, invest in research and development, expand its market presence, and pursue new opportunities. Conversely, investing in shares involves buying existing shares from other shareholders, facilitating a dynamic market where ownership interests change hands.

Returns

The pursuit of returns is a fundamental aspect of any investment. For IPO investors, returns are realized through capital appreciation, as the value of the shares they hold may increase over time. The success of IPO hinges on the company’s ability to execute its business plans, meet market expectations, and generate value for its shareholders. Conversely, returns from investing in shares can be twofold. Firstly, shareholders may benefit from capital appreciation if the share price rises. Secondly, some companies distribute dividends, allowing shareholders to reap periodic financial rewards based on the company’s profitability.

Types/Offers

Now, let’s explore the vibrant tapestry of types and offers found within IPO vs shares. IPOs can take various forms, including traditional IPOs, direct listings, or special purpose acquisition companies (SPACs). Each avenue presents unique opportunities and considerations for investors. On the other hand, shares encompass a wide range of offerings, such as common shares, preferred shares, growth stocks, value stocks, and sector-specific stocks. This diverse array allows investors to align their investment strategies with their financial goals and risk preferences.

CategoriesIPOShares
DefinitionThe initial public offering, the transition from private to public statusOwnership units in a company
ObjectiveRaise capital, and brand visibility, provide an exit opportunityOwnership, capital appreciation, dividends
PriceDetermined by underwriters, market conditions, and evaluationMarket-driven, supply and demand
ProfitabilityRaise capital, and brand visibility, provide an exit opportunityCapital appreciation, dividends
IssuerPrivate company transitioning to public statusPublic and private entities
Risk FactorsMarket volatility, demand, expectations vs. realityMarket risks, company-specific risks, economic factors
Share CapitalIssuance of new shares, expanding share capitalBuying/selling existing shares
ReturnsCapital appreciation, company growthCapital appreciation, dividends
Types/OffersTraditional IPO, direct listings, SPACs, etc.Company growth returns on investment

Factors to Consider in IPO vs Shares:

When deciding between IPO vs shares, it’s essential to consider the following factors:

Risk and Return: IPOs typically involve higher risk compared to shares of established companies. While IPOs offer the potential for significant returns, they also carry a higher level of uncertainty. Shares of established companies, on the other hand, may offer more stability but with potentially lower growth prospects.

Investment Horizon: IPOs are often suitable for investors with a longer investment horizon who can tolerate higher risk in exchange for potentially higher returns. Shares of established companies may be ideal for investors with a shorter or medium-term investment horizon, seeking stable returns and income through dividends.

Research and Due Diligence: Before investing in an IPO or shares, it is crucial to conduct thorough research and due diligence. Analyze the company’s financial health, growth prospects, industry trends, and competitive landscape. Assess the company’s management team, business model, and overall market conditions. This research will help you make informed decisions and mitigate risks associated with your investment.

Diversification: Diversification is a key strategy in investing. Consider diversifying your portfolio by investing in a mix of IPO vs shares from different industries and sectors. This can help spread your risk and potentially enhance your overall investment returns.

Accessibility: IPOs may have specific eligibility criteria or restrictions on who can participate. It’s important to understand the requirements and procedures for participating in an IPO. On the other hand, shares of established companies are generally more accessible to a broader range of investors.

Investor Sentiment and Market Timing: Investor sentiment and market conditions can significantly impact IPO vs shares. It’s essential to monitor market trends and sentiment to gauge the demand and potential performance of IPOs. Similarly, keeping an eye on broader market conditions can help identify favourable times to invest in shares.

Understanding the differences between IPO vs Shares

When it comes to investing, IPO vs shares offer distinct opportunities and considerations. IPOs allow investors to become early stakeholders in growing companies, while shares of established companies provide access to a more liquid market with historical performance data. Understanding the differences between IPO vs shares is crucial in making informed investment decisions.

Before investing, conduct thorough research, analyze the company’s financials, assess your risk tolerance, and consider your investment horizon. Diversify your portfolio to spread risk and stay updated on market trends and investor sentiment.

Therefore, although IPOs and Shares serve as means to raise capital in the equity market, it is crucial to recognize the significant distinctions between these two approaches.

To participate in any upcoming IPOs or shares, it is imperative to possess a Demat account. Opening a Demat account online is a convenient and seamless method to commence your investment expedition, taking only a few minutes of your time. Try Upstox or Zerodha

Are Willing to Invest in IPO ?

Free Eq Delivery & MF

FREE Account Opening

Upcoming IPO 2023

Company Open Close Application
RBZ Jewellers Coming soon Coming soon View IPO
Happy Forgings Coming soon Coming soon View IPO
Motisons Jewellers Coming soon Coming soon View IPO
Mukka Proteins Coming soon Coming soon View IPO
Muthoot Microfin Coming Soon Coming Soon View IPO
Allied Blenders and Distillers Coming Soon Coming Soon View IPO
Suraj Estate 18 Dec 20 Dec View IPO
DOMS IPO 13 Dec 15 Dec View IPO
Flair Writing 22 Nov 24 Nov View IPO
Tata Technologies 22 Nov 24 Nov View IPO
Fedbank Financial Services 22 Nov 24 Nov View IPO
Gandhar Oil 21 Nov 23 Nov View IPO
IREDA 21 Nov 23 Nov View IPO
ASK Automotive 7 Nov 9 Nov View IPO
Protean eGov 6 Nov 8 Nov View IPO
ESAF Bank 3 Nov 7 Nov View IPO
Mamaearth 31 Oct 1 Nov View IPO
Blue Jet Healthcare 25 Oct 27 Oct View IPO
IRM Energy 18 Oct 20 Oct View IPO
Plaza Wires 29 Sep 4 Oct View IPO
Valiant Laboratories 27 Sep 3 Oct View IPO
Updater Services 25 Sep 27 Sep View IPO
JSW Infrastructure 25 Sep 27 Sep View IPO
Manoj Vaibhav Gems 22 Sep 26 Sep View IPO
Signature Global 20 Sep 22 Sep View IPO
Sai Silks Kalamandir 20 Sep 22 Sep View IPO
Yatra Online 15 Sep 20 Sep View IPO
Zaggle Prepaid Ocean 14 Sep 18 Sep View IPO
Samhi Hotels 14 Sep 18 Sep View IPO
R R Kabel 13 Sep 15 Sep View IPO
EMS IPO 8 Sep 12 Sep View IPO
Jupiter Life Line Hospitals 6 Sep 8 Sep View IPO
Ratnaveer Precision Engineering 4 Sep 6 Sep View IPO
Rishabh Instruments 30 Aug 1 Sep View IPO
Vishnu Prakash R Punglia 24 Aug 28 Aug View IPO
Ebix Cash Coming soon Coming soon View IPO
Balaji Speciality Chemicals Coming soon Coming soon View IPO
Aeroflex Industries 21 Aug 23 Aug View IPO
Pyramid Technoplast 18 Aug 22 Aug View IPO
TVS Supply Chain 10 Aug 14 Aug View IPO
Concord Biotech 10 Aug 8 Aug View IPO
SBFC Finance 3 Aug 7 Aug View IPO
Yatharth Hospital 26 Jul 28 Jul View IPO
Netweb Technologies 17 Jul 19 Jul View IPO
Utkarsh SFB 12 Jul 14 Jul View IPO
Senco Gold 4 Jul 6 Jul View IPO
PKH Ventures 30 Jun 4 Jul View IPO
Cyient DLM 27 Jun 30 Jun View IPO
IdeaForge 26 Jun 29 Jun View IPO
HMA Agro 20 Jun 23 Jun View IPO
IKIO Lighting 6 Jun 8 Jun View IPO
Nexus Select Trust 9 May 11 May View IPO
Mankind Pharma 25 Apr 27 Apr View IPO
Avalon Technologies 3 Apr 6 Apr View IPO
Udayshivakumar Infra 20 Mar 23 Mar View IPO
Global Surfaces 13 Mar 15 Mar View IPO
Tata Technologies Coming soon Coming soon View IPO

Upcoming SME IPO 2023

Company Open Close Application
Shanti Spintex Coming soon Coming soon View IPO
S J Logistics Coming soon Coming soon View IPO
WTi Cabs Coming soon Coming soon View IPO
Presstonic Engineering 11 Dec 13 Dec View IPO
Accent Microcell 8 Dec 12 Dec View IPO
Sheetal Universal 4 Dec 6 Dec View IPO
Marinetrans India 30 Nov 5 Dec View IPO
Graphisads 30 Nov 5 Dec View IPO
Net Avenue Technologies 30 Nov 4 Dec View IPO
AMIC Forging 29 Nov 1 Dec View IPO
Deepak Chemtex 29 Nov 1 Dec View IPO
Swashthik Plascon 24 Nov 29 Nov View IPO
Rocking Deals 22 Nov 24 Nov View IPO
Arrowhead 16 Nov 20 Nov View IPO
Kalyani Cast Tech 8 Nov 10 Nov View IPO
ROX Hi-Tech 7 Nov 9 Nov View IPO
Sunrest Lifescience 7 Nov 9 Nov View IPO
Micropro Software 3 Nov 7 Nov View IPO
Baba Food Processing 3 Nov 7 Nov View IPO
SAR Televenture 1 Nov 3 Nov View IPO
Mish Designs 31 Oct 2 Nov View IPO
Vrundavan Plantation 30 Oct 1 Nov View IPO
Transteel Seating 30 Oct 1 Nov View IPO
Maitreya Medicare 27 Oct 1 Nov View IPO
Shanthala FMCG 27 Oct 31 Oct View IPO
Paragon Fine 26 Oct 30 Oct View IPO
Ondoor Concepts 23 Oct 27 Oct View IPO
Rajgor Castor Derivatives 17 Oct 20 Oct View IPO
WomenCart 16 Oct 18 Oct View IPO
Arvind and Company Shipping 12 Oct 16 Oct View IPO
Committed Cargo 6 Oct 10 Oct View IPO
Akanksha Power 29 Sep 4 Oct View IPO
Sharp Chucks 29 Sep 4 Oct View IPO
Plada Infotech 29 Sep 4 Oct View IPO
Karnika Industries 29 Sep 4 Oct View IPO
Vishnusurya Projects 29 Sep 4 Oct View IPO
Vivaa Tradecom 27 Sep 4 Oct View IPO
Oneclick Logistics 27 Sep 3 Oct View IPO
Canarys Automations 27 Sep 3 Oct View IPO
E Factor Experiences 27 Sep 3 Oct View IPO
Vinyas Innovative 27 Sep 3 Oct View IPO
Kontor Space 27 Sep 29 Sep View IPO
City Crops Agro 26 Sep 29 Sep View IPO
Goyal Salt 26 Sep 29 Sep View IPO
Sunita Tools 25 Sep 27 Sep View IPO
Arabian Petroleum 25 Sep 27 Sep View IPO
Newjaisa Technologies 25 Sep 27 Sep View IPO
Digikore Studios 25 Sep 27 Sep View IPO
Inspire Films 25 Sep 27 Sep View IPO
Saakshi Medtech and Panels 25 Sep 27 Sep View IPO
Organic Recycling Systems 21 Sep 26 Sep View IPO
Mangalam Alloys 21 Sep 25 Sep View IPO
Marco Cables 21 Sep 25 Sep View IPO
Hi-Green Carbon 21 Sep 25 Sep View IPO
Techknowgreen Solutions 18 Sep 21 Sep View IPO
Madhusudan Masala 18 Sep 21 Sep View IPO
Holmarc Opto-Mechatronics 15 Sep 20 Sep View IPO
Kody Technolab 15 Sep 20 Sep View IPO
Cellecor Gadgets 15 Sep 20 Sep View IPO
Kundan Edifice 12 Sep 15 Sep View IPO
Chavda Infra 12 Sep 14 Sep View IPO
Jiwanram Sheoduttrai 8 Sep 12 Sep View IPO
Meson Valves 8 Sept 12 Sep View IPO
Unihealth Consultancy 8 Sept 12 Sept View IPO
Kahan Packaging 6 Sept 8 Sept View IPO
Pramara Promotions 1 Sept 5 Sept View IPO
Basilic Fly Studio 1 Sep 5 Sep View IPO
Saroja Pharma 31 Aug 5 Sept View IPO
CPS Shapers 29 Aug 31 Aug View IPO
Mono Pharmacare 28 Aug 30 Aug View IPO
Sahaj Fashions 25 Aug 29 Aug View IPO
SunGarner Energies 21 Aug 23 Aug View IPO
Crop Life Science 18 Aug 22 Aug View IPO
Bondada Engineering 18 Aug 22 Aug View IPO
Shoora Designs 17 Aug 21 Aug View IPO
Shelter Pharma 10 Aug 14 Aug View IPO
Srivari Spices 1 Aug 4 Aug View IPO
Sangani Hospitals 4 Aug 8 Aug View IPO
Yudiz Solutions 4 Aug 8 Aug View IPO
Vinsys IT 1 Aug 4 Aug View IPO
Oriana Power 1 Aug 3 Aug View IPO
Zeal Global Services 28 Jul 1 Aug View IPO
Shri Techtex 26 Jul 28 Jul View IPO
Innovatus Entertainment 25 Jul 27 Jul View IPO
Khazanchi Jewellers 24 Jul 28 Jul View IPO
Yasons Chemex 24 Jul 26 Jul View IPO
Asarfi Hospital 17 Jul 19 Jul View IPO
Service Care 14 Jul 18 Jul View IPO
Ahasolar Technologies 10 Jul 13 Jul View IPO
Kaka Industries 10 Jul 12 Jul View IPO
Drone Destination 7 Jul 11 Jul View IPO
AccelerateBS India 6 Jul 11 Jul View IPO
Alphalogic Industries 3 Jul 6 Jul View IPO
Tridhya Tech 30 Jun 5 Jul View IPO
Synoptics Technologies 30 Jun 5 Jul View IPO
Global Pet 29 Jun 3 Jul View IPO
Pentagon Rubber 26 Jun 30 Jun View IPO
Magson Retail 23 Jun 27 Jun View IPO
Greenchef Appliances 23 Jun 27 Jun View IPO
Essen Speciality 23 Jun 27 Jun View IPO
Veefin Solutions 22 Jun 26 Jun View IPO
Aatmaj Hospital 19 Jun 21 Jun View IPO
Vilin Bio Med 16 Jun 21 Jun View IPO
Cell Point 15 Jun 20 Jun View IPO
Cosmic CRF 14 Jun 16 Jun View IPO
Bizotic Commercial 12 Jun 15 Jun View IPO
Urban Enviro 12 Jun 14 Jun View IPO
Spectrum Talent 9 Jun 14 Jun View IPO
Sonalis Consumer 7 Jun 9 Jun View IPO
Kore Digital 2 June 7 June View IPO
Comrade Appliances 31 May 5 June View IPO
Sahana System 31 May 2 June View IPO
CFF Fluid Control 30 May 2 June View IPO
Infollion Research 29 May 31 May View IPO
Hemant Surgical 24 May 26 May View IPO
Proventus Agrocom 24 May 26 May View IPO
Vasa Denticity 23 May 25 May View IPO
Crayons Advertising 22 May 25 May View IPO
Innokaiz India 28 Apr 3 May View IPO
De Neers Tools 28 Apr 3 May View IPO
Retina Paints 19 Apr 24 Apr View IPO
Quicktouch Technologies 18 Apr 21 Apr View IPO