IPO on the stock exchange The term used to describe a company's entry into the stock market through an initial public offering (IPO). In practice, it's when a company goes public, starts selling shares to the market, and allows investors to become partners in the business. For investors, the topic is attractive because it can represent early access to promising companies, but it also involves significant risks.
The issue gained even more visibility because IPO cycles change according to the market. Globally, there have been... 1,293 IPOs in 2025, raising US$171.8 billion., a 39% increase in resources compared to 2024, according to EY. In Brazil, the recent scenario has been more selective, with few IPOs on the B3 stock exchange and greater investor caution. In this guide, you will understand what an IPO is, how the process works, how to participate, what risks to assess, and where to follow the market's next moves.
Key points
- IPO stands for IPO Initial Public Offering, or initial public offering, This is the moment when a company goes public and starts trading its shares on the stock exchange.
- The main objective of an IPO is usually to raise capital for growth, reduce debt dependence, and increase market visibility.
- The process involves steps such as due diligence, registration with the CVM (Brazilian Securities and Exchange Commission), listing on the B3 (Brazilian Stock Exchange), prospectus, roadshow, bookbuilding, and reservation period.
- Not every IPO is a good opportunity: since 2014, among 94 IPOs on the B3 analyzed, only 17 were profitable in the survey cited by [source missing]. Investor10.
- Investors need to analyze the prospectus, the intended use of the funds, valuation, sector risks, and the difference between primary and secondary offerings before investing.
What is an IPO on the Stock Exchange?
What does IPO mean?
IPO means Initial Public Offering. In Portuguese, the most commonly used translation is initial public offering. This is the event that marks the first time a company offers its shares to the public in the capital market.
When someone searches for IPO on the stock exchange, Typically, one wants to understand how a company goes from being privately held to having shares traded on a stock exchange, such as the B3 in Brazil.
What is an initial public offering?
An initial public offering (IPO) is the process that allows the sale of shares to institutional investors and individuals. Instead of relying solely on private partners, funds, or banks, the company gains access to market resources.
This process connects the company and the investor. The company raises capital. The investor buys a stake in the company and begins to monitor its performance.
What happens when a company goes public?
By going public, a company becomes a listed company. This brings benefits, but also increases governance, transparency, and accountability obligations.
After the IPO, the company needs to follow the rules of the CVM (Brazilian Securities and Exchange Commission) and B3 (Brazilian Stock Exchange), disclose periodic information, maintain relationships with investors, and cope with market pressure regarding results, growth, and profitability.
How does an IPO work in practice?
Steps in the IPO process
The process of IPO on the stock exchange It doesn't happen overnight. It requires legal, accounting, regulatory, and strategic preparation.
Company planning and preparation
Before launching the offering, the company needs to organize its internal structure. This includes reviewing governance, controls, financial statements, internal policies, and investment thesis.
It is also common to hire coordinating banks, law firms, auditors, and consultants to support the operation.
Audit and regulatory compliance
The company needs to present reliable financial information that meets market standards. Independent auditing is a central part of this process.
At this stage, the company also adjusts internal processes to meet compliance, disclosure, and corporate governance standards.
Registration with the CVM and listing on B3
To make the offering, the company needs to meet regulatory requirements and follow applicable registration procedures. In addition, it must apply for listing on the B3 stock exchange, according to the chosen segment.
Official statistics on public offerings can be followed on the website. B3.
Offer prospectus
The prospectus is one of the most important documents in an IPO. It gathers information about the company, sector, strategy, risks, corporate structure, and the intended use of the funds raised.
For investors, reading the prospectus is not optional. It contains the risk factors and details that help distinguish a good narrative from a good opportunity.
Roadshow
During the roadshow, the company and its coordinators present the business concept to potential investors. It's a phase of promotion and gauging interest.
This contact helps the market understand the company and also contributes to the formation of demand for supply.
Bookbuilding
Bookbuilding is the process of collecting investment intentions to help determine the share price in an IPO. Investors indicate how much they wish to invest and at what price range.
Based on this demand, the coordinators define the final price of the offer. Therefore, bookbuilding is a key point to understanding how it works. IPO on the stock exchange.
Booking period
During the reservation period, individual investors can indicate their interest in participating in the IPO through their brokerage firm. At this stage, there is usually an indicative price range.
The reservation does not guarantee that the investor will receive exactly the desired amount. In highly competitive offerings, there may be pro-rata allocation.
Debut of shares on the Stock Exchange
After the pricing and settlement of the offering, the shares begin trading on the stock exchange. From there, the stock enters the secondary market and its price fluctuates according to supply and demand.
This is when many investors observe strong volatility, especially when there is speculation on the first day.
Why does a company go public?
Raising funds for growth
The most common reason is to raise money for expansion. The company can use the funds to open new facilities, invest in technology, make acquisitions, reduce leverage, or accelerate growth.
In many cases, an IPO serves as an alternative to raising capital through loans and bank debt.
Liquidity for partners and previous investors
In addition to raising new capital, an IPO can also allow existing partners, funds, and early investors to sell part of their stake.
This increases liquidity and may represent a partial exit for those who invested in the company's private phase.
Increased visibility, credibility, and governance.
Listed companies tend to gain more market exposure. This can facilitate access to partners, customers, suppliers, and new sources of capital.
Going public also tends to raise the standard of governance, transparency, and financial discipline.
An alternative to loans and debt.
By issuing shares, a company raises capital without necessarily increasing its debt. This can strengthen the balance sheet and improve the capital structure.
On the other hand, the cost is dividing the business among new shareholders and accepting greater market scrutiny.
What are the requirements for a company to go public?
Corporate structure and the need to be a public limited company (SA).
In general, the company needs to be organized as a corporation. This structure is compatible with the issuance and trading of shares on the market.
Corporate governance and transparency
The company must demonstrate the ability to operate with governance standards appropriate to the open market. This includes boards, internal controls, policies, and accountability.
Audited financial statements
Financial information needs to be audited by an independent company. This is essential to ensure the credibility of the figures presented to the market.
Requirements of the CVM and B3
The company must comply with regulatory, disclosure, and listing requirements. These requirements vary depending on the offering structure and the chosen segment.
B3 listing segments
B3 has different governance segments, which signal distinct commitments to the market.
New Market
It is the segment with the highest standard of corporate governance. It is often a benchmark for companies that want to demonstrate a greater commitment to best practices.
Level 2
It also includes relevant governance requirements, although with its own characteristics compared to the Novo Mercado (New Market).
Level 1
It has more basic requirements than the higher levels, but still represents an additional commitment to transparency.
Bovespa Mais and Bovespa Mais Level 2
These are alternatives designed for companies that wish to access the market gradually, with a structure adapted to this process.
Types of offerings in an IPO
Primary offering
In a primary offering, the company issues new shares. The money raised goes into the company's coffers.
This model is common when the focus is on financing growth, expansion, or financial reorganization.
Secondary offer
In a secondary offering, the sellers are the current shareholders, such as founders, funds, or other investors. In this case, the money does not go to the company.
Difference between primary and secondary supply
This distinction is crucial. If the majority of the offering is secondary, the IPO may be more linked to the exit of partners than to raising capital for expansion.
For investors, it's worth asking: will the money strengthen the company or, more importantly, allow for divestment by existing shareholders?
What are the advantages and disadvantages of going public?
Advantages for the company
Going public can transform a company's growth potential.
Access to capital
The company will now be able to raise funds on a potentially larger scale than traditional bank lines of credit.
Liquidity
Shares traded on the stock exchange facilitate the entry and exit of shareholders, as well as allowing for future offerings.
Credibility
Listing can strengthen reputation, visibility, and market confidence.
Market valuation
Trading on the stock exchange creates a public benchmark of value for the company.
Disadvantages and challenges
THE IPO on the stock exchange It also brings significant costs and requirements.
High costs
According to the content of B3 cited by Bora Investir, The cost of an IPO can reach... 6% of the offer value.
Bureaucracy and complexity
The process requires time, specialized teams, extensive documentation, and ongoing regulatory adaptation.
Partial loss of autonomy
With new shareholders and the market monitoring results, the company has less freedom to make completely closed decisions.
Recurring disclosure obligations
After the IPO, the company needs to maintain a schedule for disclosing relevant facts, results, and communication with investors.
How to invest in an IPO?
How to participate in the offer through the brokerage firm
Individual investors typically participate through an authorized brokerage firm. The platform allows them to access the offering, read documents, and place reservation orders.
How does the booking request process work?
In the reservation request, the investor indicates how many shares they wish to buy or how much they intend to invest, within the indicated price range.
If the final price is above the limit set by the investor, the order may not be executed.
How is the final price determined?
The final price is determined after bookbuilding, based on observed investor demand. It does not always coincide with the midpoint of the indicative price range.
What happens in case of pro-rata allocation?
When demand exceeds the available quantity, a pro-rata allocation occurs. In this case, the investor may receive fewer shares than they requested.
If there are remaining funds, the unused amount is returned by the brokerage firm according to the offer's rules.
What changes after the start of negotiations?
After its initial public offering, the stock begins trading normally on the secondary market. The price may rise, fall, or remain unchanged, depending on market perception.
It's important to remember that strong demand in an IPO doesn't guarantee good performance later on.
Is it worth investing in an IPO?
Potential opportunities
One IPO on the stock exchange It can offer access to growing companies, innovative sectors, or investment theses with long-term potential.
In some cases, buying in an IPO can make sense when the company has solid fundamentals, a clear use of resources, and a reasonable valuation.
Main risks for the investor
Not every debut is promising. Recent Brazilian history suggests caution.
Little public history
Newly listed companies still have little history of interaction with the open market, which makes comparative analysis difficult.
Information asymmetry
Even with prospectuses and public documents, institutional investors often have greater analytical capacity and access than individual investors.
Volatility on the first day
The start of trading may be marked by speculation, flippers, and sharp price movements.
Risk of underperformance.
According to a survey cited by Investor10, Of the 94 companies that debuted on the B3 stock exchange since 2014, only 17 were profitable. Meanwhile, Quantum Finance It highlights that Brazil has been experiencing a shortage of IPOs since 2022, following the boom of 2020 and 2021.
What type of investor profile is an IPO suitable for?
An IPO is usually more suitable for those who accept volatility, can analyze companies, and think in the medium or long term. For beginners, investing solely based on hype is usually a mistake.
How to analyze an IPO prospectus in practice.
The prospectus is long, but not every section has the same weight. To gain efficiency, focus first on:
- business model and strategy
- use of the funds raised
- risk factors
- financial situation
- supply structure
- participation of the selling shareholders
- comparables and valuation
Common warning signs include:
- mostly secondary supply
- company still without a clear path to profitability
- excessive dependence on a few clients.
- very cyclical sector
- Strong growth, but with cash flow under pressure.
- weak governance
Checklist for evaluating whether it's worth participating in an IPO.
Before investing, ask yourself these questions:
| Question | Why does it matter? |
| Is the company profitable or does it have a credible path to profitability? | It helps measure the sustainability of the business. |
| Does the money go into the company's cash register? | It shows whether the offer is primary or more focused on partner exits. |
| Does the valuation seem reasonable? | Avoid paying too much for your thesis. |
| Is the sector predictable or highly volatile? | Impacts risk and sensitivity to cycles. |
| Is the governance strong? | Reduces execution risks and increases transparency. |
| Does the prospectus present significant risks that have been little discussed? | Avoid decisions based solely on marketing. |
| Would I invest in this company if it were already listed? | It helps to separate conviction from euphoria. |
Difference between IPO, follow-on offering, and secondary market.
An IPO is a company's first public offering of shares. A follow-on offering, on the other hand, is a new offering made by a company that is already listed.
In the primary market, the money from the issuance goes to the company when there is a primary offering. In the secondary market, investors trade shares among themselves on the stock exchange, without the value going to the company's coffers.
This difference helps to understand the flow of money and the logic behind each transaction.
Where can I follow the upcoming IPOs on the Stock Exchange?
How to check ongoing IPOs
Who wants to monitor? upcoming IPOs You can follow along:
- statistics and information from B3
- IPO calendars TradingView
- calendar of offers in Investing.com
Furthermore, the market is monitoring companies that are ready to go public when the window of opportunity improves. According to... InfoMoney, there was 54 companies with category A registration at the CVM (Brazilian Securities and Exchange Commission). ready to take advantage of a market window.
Most common offer statuses
Filed
The company has formally initiated the process, but the offer is still in the preliminary stages.
Defined price range
The operation has progressed and there is already an indicative price range.
Completed
The IPO was completed and the shares began trading on the stock exchange.
Canceled
The offer was withdrawn before completion. This may occur due to market conditions, low demand, or a strategic decision.
Interrupted
The transaction was suspended or did not proceed at that time. For the investor, this usually means that the reservation does not convert into a purchase and the funds are released or returned according to the brokerage's procedure.
Examples of companies that have gone public in Brazil.
Recent IPOs on the B3
Some examples cited in publicly available monitoring databases:
THE Quantum Finance It also highlights cases of strong post-IPO appreciation, such as Ambipar and Orizon, showing that there are positive exceptions even in difficult cycles.
Cases of cancelled or interrupted IPOs
Not all offers reach the trading floor. Examples:
- W2W E-commerce Wines (WNBR3) with offer interrupted
- Comerc Participações (COMR3) with cancelled offer
What do these cases teach investors?
The IPO market is highly dependent on what's called the market window. Interest rates, risk appetite, the macroeconomic environment, and institutional demand can change rapidly.
Therefore, monitoring the status of the offering is important, but it does not replace a fundamental analysis of the company.
FAQ about IPOs on the Stock Exchange
What is an IPO on the stock exchange?
An IPO on the stock exchange is the initial public offering of a company's shares. It's the moment when a company goes public and starts trading its shares on the stock exchange.
Are IPO and initial public offering the same thing?
In practice, yes. An IPO is the operation that formalizes a company's opening of its capital to the investing public.
How to buy shares in an IPO?
You need to have an account with a brokerage firm participating in the offering, access the operation's materials, and place a reservation order within the defined timeframe.
How does bookbuilding work in an IPO?
Bookbuilding gathers investment intentions from different market participants. Based on this demand, the final share price in the offering is determined.
What is the difference between a primary and secondary offering in an IPO on the stock exchange?
In a primary offering, the money goes to the company. In a secondary offering, it goes to the selling shareholders, not to the company's coffers.
How much does it cost for a company to go public?
There is no fixed value, but the cost can reach 6% of the offer value, according to the content of B3 cited by Bora Investir.
Is it worth investing in an IPO?
It depends on the quality of the company, the offering price, the sector, and its risk profile. IPOs can generate opportunities, but they also tend to bring volatility and uncertainty.
What are the risks of investing in an IPO?
The main risks are limited public historical data, information asymmetry, stretched valuation, initial volatility, and underperformance.
What happens if an IPO is cancelled?
If the offer is canceled, the purchase is not completed. Generally, the reserved funds are released or returned to the investor according to the operational rules of the brokerage firm and the offer.
Where can I find information about upcoming IPOs on the B3 (Brazilian Stock Exchange)?
You can follow the page of B3 public offering statistics, in addition to calendars such as TradingView e Investing.com.