What Is an IPO? How Companies Go Public
Snowflake priced its IPO at $120 per share in September 2020 and opened for trading at $245 — a 104% pop on day one. Early investors doubled their money before most retail traders could execute a buy order. Warren Buffett's [Berkshire Hathaway](/posts/2026-02-28/brk-b-analysis-berkshire-hathaways-q4-operating-earnings-drop-29-as-abel-takes-the-reins-with-373-billion-in-firepower), which secured a pre-IPO allocation, watched its stake surge to $1.5 billion by the closing bell. That first-day frenzy captures everything that makes IPOs both fascinating and dangerous for individual investors. An initial public offering is the process through which a private company sells shares to the public for the first time. It's how startups become stocks, how founders get liquid, and how Wall Street's investment banks earn some of their fattest fees. Understanding the mechanics — and the incentives of everyone involved — is essential before you invest in any newly public company.