Twitter IPO- but what is IPO and how to buy
Have you recently heard or read that Twitter is going to launch its IPO this week. It is the most awaited IPO after Facebook, though market experts are hoping that twitter does not deal with the same fate. The shares of Twitter will be traded on New York Stock Exchange (NYSE) under the symbol TWTR. Twitter is expected to float 20 million shares at an issue price between $17 and $20 valuing the social media company at 11 billion dollars.
However many people who want to buy twitter shares do not even have the basic knowledge of IPO. Therefore, let us understand the basics of IPO.
When the company changes its status from private limited company to public limited company it offers its shares for the normal public to buy. It is a way of raising funds for the company and people get owners of the company to that share they own. This first offer by the company to sell shares to public is called initial public offer or IPO.
The amount of shares sold to a person in an IPO
Float is the total number of shares floated in the market for public to buy.
Market capitalization is the current stock price of the company multiplied by the number of shares outstanding.
The date on which the issue is traded publicly for the first time is called offer date.
Red herring prospectus
This is a prospectus for the people who want to buy shares of the company. It contains description of business, their strategy, historical financial data and future growth plan.
If you want to buy twitter shares, you can buy it through an overseas trading account. However, according to RBI guidelines you cannot invest more than $75,000 in shares. Another alternative method is to invest in mutual funds, which are buying twitter shares.