What is an IPO? How a company goes public, step by step

An IPO, or initial public offering, is the first time a company sells its shares to the public. Before it, the shares are held by founders, staff and private investors; after it, anyone can buy them on a stock exchange. In the US, a company may not offer shares to the public until it has registered the offering with the Securities and Exchange Commission, usually on a Form S-1, the SEC explains.

The best way to see how an IPO works is to follow a real one. On 26 October 2026 Anthropic, the maker of the Claude AI models, made its registration statement public. It is one of the most closely watched listings of the year, and every step below can be read off its filings.

What does IPO stand for, and why do companies go public?

IPO stands for initial public offering. “Initial” because it is the first sale to the public; later sales of new shares are called follow-on or secondary offerings.

A company goes public for two main reasons. It raises money by selling new shares, and it gives its existing owners a market in which to sell theirs. An IPO “helps to establish a trading market for the company’s shares”, in the SEC’s words. Often both happen in the same deal. Anthropic’s filing says the company will sell new shares and that “selling stockholders” will sell more of their own; the money from the second group goes to them, not to the company.

The price of going public is disclosure. A listed company must publish its accounts every quarter and every year, on Forms 10-Q and 10-K, and explain its risks in public.

How does an IPO work? The steps

1. The filing. The company writes a prospectus: a description of the business, its accounts, its risks, its owners and the terms of the sale. The prospectus is the main part of the S-1. Many companies first submit a draft in confidence, which the SEC reviews before anything is made public. Anthropic’s filing history on EDGAR shows a confidential draft on 1 June 2026, five amended drafts between July and October, and the public S-1 on 26 October: 147 days from first draft to public filing.

2. The SEC review. SEC staff read the filing and send comments on anything that looks incomplete, unclear or against the accounting rules, and the company answers with amendments, marked S-1/A. The review is not a seal of approval. The SEC does not judge whether an IPO is a good investment; it checks that the required facts are disclosed.

3. The banks and the price. A group of investment banks, the underwriters, manage the sale. Anthropic’s cover page names 22 of them, led by Goldman Sachs, Morgan Stanley, J.P. Morgan and Citigroup. Before the sale, the banks collect “indications of interest” from investors on a tour known as the roadshow, and recommend a price; the company decides. The first public S-1 often leaves the numbers blank. Anthropic’s says the price “will be between $ and $”: the range comes in a later amendment.

4. The listing. Once the SEC has no more comments, it declares the registration “effective”, the final price is set, and the shares start trading on an exchange. Anthropic has applied to list on the Nasdaq Global Select Market under the symbol “ANT”. The final prospectus, with the price, appears on EDGAR as a 424B4 filing.

5. The lock-up. Insiders usually agree not to sell for a set time after the listing. Most lock-ups last 180 days, the SEC says, and a share price may fall as the end of one approaches, because buyers expect a wave of selling. Anthropic’s runs for up to 180 days, with an earlier end tied to its results for the first quarter of 2027.

How to buy shares in an IPO

There are two ways, and for most people only the second is open.

The first is to buy at the offering price, before trading starts. Those shares go to the underwriters’ clients, and most of a hot IPO goes to institutions: mutual funds, pension funds, hedge funds, insurers and wealthy clients, the SEC notes.

The second is to buy on the exchange once trading begins, through any broker, at whatever the market price is on the day. That price can be well above, or below, the offering price. For Anthropic, neither is possible yet: until the SEC declares its filing effective, there are no shares to buy.

What to read in an IPO prospectus

The SEC’s advice is to read the latest version of the prospectus, because it changes as the review goes on. Four parts matter most for a buyer:

• The summary and the accounts. Revenue, losses and cash, usually for three years and the latest half-year.
• The risk factors. The company’s own list of what could go wrong. Anthropic’s runs to dozens of pages.
• The share classes. Who controls the company after the listing. In many tech IPOs the founders keep shares with extra votes. In Anthropic’s, the founders’ company will hold a share class with 50.1% of the votes but no claim on profits, and a trust will elect a majority of the board through another class.
• Shares eligible for future sale. The lock-ups, and when the insiders’ shares can come to market.

Is an IPO a good investment?

There is no general answer, and the SEC calls IPOs “risky and speculative investments”. A new public company has no trading history and, often, no record of reporting its results in public, so the prospectus may be the only information there is. The price is set by the company and its banks in a sale they run, and the shares can swing widely in their first months, as the end of the lock-up nears.

The queue of companies waiting to list in 2026 shows how much the timing matters. The ring maker Oura pulled its IPO in September, citing uncertain markets, and Revolut chose New York over London because that is where the buyers are. What Anthropic’s own filing shows about its business is in our report on the prospectus.