Welcome to English as a Second Language podcast number 1048, Launching an Initial Public Offering.
This is English as a Second Language podcast episode 1048.
I'm your host, Dr Jeff McQuillan, coming to you from the Center for Educational Development in beautiful Los Angeles, California.
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This episode is a dialogue between Zoe and Midas about initial public offerings.
Let's get started.
What are you looking at?
It's the prospectus for Google's IPO.
I wish I could get in on the initial public offering, but since I can't, I'm not really familiar with how the stock market works.
You mean you're going to buy shares in Google?
That's right.
An IPO is a way for a privately owned company to become a publicly owned one.
The owners of the company do it to raise capital, or sometimes it's for early investors to cash in.
Why can't you buy stock in the initial public offerings?
A company like Bugo works with an underwriter, like a major investment bank, to help set the share price and to find buyers for the initial offering.
Okay, I'm following you so far.
Well, that first sale of stock is usually done in bulk.
And I don't have a few million dollars lying around to buy that much stock.
Luckily for me, those first buyers then turn around and sell that stock in smaller amounts.
And that's when you'll buy.
That's right.
You should get in on it too.
You mean buy some boogal stock?
Sure, why not?
And risk losing my shirt?
No thanks.
Zoe asks Midas, what are you looking at?
What are you reading?
Midas says it's the prospectus for Google's IPO.
A prospectus P-R-O-S-P-E-C-T-U-S is a printed document usually that provides information about some investment opportunity.
One of the laws here in the United States requires that companies who want to sell stock or sell partial ownership in their companies have to print out or give people written information about the company and the possible risks involved, the possible ways that you might lose your money.
This document, which is probably now communicated to people more by PDF than by mail, is called a prospectus.
Midas is looking at a prospectus for a company's IPO.
IPO stands for Initial Public Offering.
Initial I-N-I-T-I-A-L here means the first time it's done.
A public offering is when a company decides it's going to sell stock partial ownership in the company, allowing the average person, or at least some people, to buy partial ownership in the company.
This is abbreviated IPO, and it stands for Initial Public Offering.
Midas says I wish I could get in on the initial public offering, but since I can't, I'll buy stock as soon as the company becomes publicly traded.
To get in on something means to participate in something that usually only a small group of people are allowed to participate in.
Sometimes, when a company has an IPO and they start to sell stock, it will only be available to a certain group of people.
However, eventually the company becomes publicly traded, allowing anyone to buy stock in it.
Publicly traded means that the shares in the company stock in the company is sold to the public, usually through what's called a stock exchange, such as the New York Stock Exchange or the Toronto Stock Exchange.
Yeah.
They have a stock exchange in Toronto.
Of course they do.
Many countries have stock exchanges.
There are a couple here in the U.S. and several in Europe and in other countries as well.
Well, we're talking about a publicly traded company here.
Zoe says I'm not really familiar with how the stock market works.
The stock market refers generally to the financial market in which people buy and sell shares in companies.
The stock market often refers to a, It can also be used to refer to the activity of all the different exchanges in a country or even around the world.
People sometimes say, I'm going to put money in the stock market.
I'm going to buy stocks.
I'm going to buy partial shares in companies.
Zoe doesn't understand how the stock market works.
She says, you mean you're going to buy shares in Google?
A share is your small percentage of ownership of a company.
It's an equal part.
If you own more shares, you own more parts of the company.
The share is, if you will, the unit of ownership.
Midas says, that's right.
An IPO is a way for a privately owned company to become a publicly owned one.
If we say something is privately owned, we mean that the average person on the street can't buy partial ownership in the company.
The company is owned, say, by one family or one group of investors.
Publicly owned companies are companies that sell partial ownership, sell stock in their companies.
And these companies have different regulations, different rules they have to follow because they are publicly owned.
An initial public offering is a way for a privately owned company to get more money for selling more of its product or for doing research or for expanding the business somehow.
Midas says the owners of the company do it, that is, have an IPO, to raise capital.
Capital, C-A-P-I-T-A-L, refers to money that is used for some business purpose.
To raise R-A-I-S-E capital means to get more money, to get money from people for some particular business project.
Midas says sometimes the IPOs are for early investors to cash in. perhaps to cash in on.
An early investor is someone who gives money for partial ownership in the company when the company is still relatively new or young.
A privately owned company can get money from people who help it grow, and then, when a There's an IPO and the company's stock is worth a lot of money.
These initial investors, these early investors often cash in.
To cash in means to make a lot of money by selling what you have.
So you sell your shares in the company in order to get your money back plus a lot of other money.
At least that's the idea.
Zoe then asks, why can't you buy stock in the initial public offering?
Midas says, a company like Bugle works with an underwriter, like a major investment bank.
An underwriter, U-N-D-E-R, W-R-I-T-E-R, is an individual or but more commonly a company, that purchases shares from a company and then resells them to people who want to buy them, to investors.
Usually this is done through something like an investment bank.
An investment bank is a large bank that has investments and that helps companies invest, raise capital through selling stocks.
Midas says that the underwriter helps set the share price and find buyers for the initial offering.
The share price is how much that one unit of partial ownership is worth, how much it will cost you.
Zoe says, okay, I'm following you so far, meaning I understand what you mean up to this point.
Midas continues, well, that first sale of stock is usually done in bulk.
In bulk, B-U-L-K, means in a large quantity, when you buy a lot of something at once.
Some people, when they see a good sale on I don't know, paper towels or toilet paper or cans of tuna, will buy them in bulk.
They'll buy lots of them because the price is good.
I buy my coffee in bulk whenever it goes on sale at the grocery store.
I buy as many as I can at a cheap price.
That's what Midas is talking about when he says that the sale of stock is done in bulk, meaning it's sold in large quantities.
That means that you have to have a lot of money typically in order to buy it.
Midas says, I don't have a few million dollars lying around to buy that much stock.
When we talk about something lying, L-Y-I-N-G, around, we mean available.
Something typically money that you can just access, get the use of quickly, that's not being used for anything else.
Midas says luckily for me, fortunately for me.
Those first buyers then turn around and sell that stock in smaller amounts.
The phrasal verb to turn around here means to immediately do something else, usually buy or sell.
For example, I could buy a new computer today and And then turn around and sell it tomorrow to someone else for a higher price.
Or I could sell my computer today and turn around tomorrow and buy a new computer.
So it usually refers to buying and then selling or selling and then buying.
The two actions being done very close together in time.
Zoe says and that's when you'll buy, meaning when the initial investors, who have a lot of money, start selling their stock in smaller amounts.
Midas says, that's right, that's correct.
You should get in on it too.
Zoe says, you mean buy some boogal stock?
Midas says, sure, why not?
Zoe says, and risk losing my shirt?
No thanks.
To lose L-O-S-E, your shirt S-H-I-R-T, means to lose all your money, typically in some sort of investment.
You could, for example, loan your money to a friend who's starting a business, and then the business is not successful and you don't get your money back.
If you loaned him all of your money or most of your money, you could lose your shirt.
That is, you could go broke.
You could have no money left.
Now let's listen to the dialogue, this time at a normal speed.
What are you looking at?
It's the prospectus for Google's IPO.
I wish I could get in on the initial public offering, but since I can't, I'll buy stock as soon as the company becomes publicly traded.
I'm not really familiar with how the stock market works.
You mean you're going to buy shares in Google?
That's right.
An IPO is a way for a privately owned company to become a publicly owned one.
The owners of the company do it to raise capital, or sometimes it's for early investors to cash in.
Why can't you buy stock in the initial public offering?
A company like Google works with an underwriter, like a major investment bank, to help set the share price and to find buyers for the initial offering.
Okay, I'm following you so far.
Well, that first sale of stock is usually done in bulk and I don't have a few million dollars lying around to buy that much stock.
Luckily for me, those first buyers then turn around and sell that stock in smaller amounts.
And that's when you'll buy.
That's right.
You should get in on it too.
You mean buy some boogal stock?
Sure, why not?
And risk losing my shirt?
No thanks.
We'd like to thank our wonderful script writer, Dr. Lucy Say, for her wonderful scripts.
From Los Angeles, California, I'm Jeff McQuillan.
Thank you for listening.
Come back and listen to us again right here on ESL Podcast.
English as a Second Language Podcast is written and produced by Dr Lucy Say, hosted by Dr Jeff McQuillan.
Copyright 2014 by the Center for Educational Development.
