An equity offering of stock is a common occurrence in the finance industry. Companies offer stock to raise capital for their businesses. The stock is sold to the public in the form of shares. The first offering by a company is called an "initial public offering," but companies may issue a new offering later in their lifecycle as well. The process of buying stock from an equity offering is straightforward. However, profiting from these investments can be challenging, as the stock market is a volatile and risky entity.
Step 1
Open a brokerage account. Online brokers will give you complete control over your stock purchases, while a full-service brokerage firm will provide you with a professional to take your stock orders and provide investment advice.
Step 2
Fund the brokerage account with investment capital. Transferring money into an online broker involves a few clicks of the mouse in the form of an ACH transfer. Full-service brokerage firms may take checks or wire transfers.
Step 3
Identify the name of the company or stock ticker symbol under which the equity offering will trade.
Step 4
Look up the current stock price of the equity offering. If the equity offering has not yet occurred, look up the established price for the shares as determined by the company. This information is usually available on the company's website, financial television networks, financial websites or financial newspapers.
Step 5
Divide the amount of capital you wish to commit to the stock purchase by the price of the stock. This is the total number of shares you will buy.
Step 6
Place a "buy" order with your broker for the number of shares you have calculated for the specific stock you wish to purchase. The stock will be purchased in your name and be held in your brokerage account.
Tips and Warnings
- If you wish to set the maximum price you are willing to pay for the stock, place a "buy limit" order for your desired price, which should be near the current price or established price of the offering. This will ensure you do not pay a much higher price if market activity pushes the stock substantially higher in a short period of time. However, this type of order cannot guarantee that you will get the stock if it does not trade at your desired price target. Place a "buy market" order if you want to guarantee ownership of the stock regardless of its traded price at the time of the order. Either order type may be processed with an online broker or a full-service firm. The market order may fill your account with shares priced higher than you had intended, however.
Things You'll Need
- Brokerage account
- Investment capital
Member Comments