What is the difference between initial public offering (IPO) and offer for sale (OFS)?
An initial public offering, or IPO, is the first time a particular issue of a security is made available for sale on the open market. These issues are under regulation by the Securities and Exchange Commission, or SEC, and require strict financial reporting criteria on a regular basis to remain available for trade by investors. Though the underwriting firms such as Goldman Sachs or Morgan Stanley that bring the issue to market hold shares to sell to their clients at the initial sales price, average investors can obtain the shares once they begin trading in the secondary market. IPOs can be a risky bet for investors, as there is no previous market activity to evaluate. This is why reading the IPO prospectus report and gaining any knowledge about the company is crucial before investing.