Primary vs Secondary Markets

IPOs, issuance, trading

~20 min · 5 lessons

What you'll learn

✓Explain an IPO
✓Distinguish primary from secondary trading

Lessons

🍎
Two Markets, One Stock
Apple in 1980 and Apple today
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How an IPO Actually Works
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Life on the Secondary Market
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Three Paths to Going Public
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Final Boss: Primary vs Secondary
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Sources

All content is drawn from the sources below. We deliberately avoid unverified material.

Going Public: An Overview of the Registration Process
U.S. Securities and Exchange Commission · institutional
Plain-English source for the IPO process, S-1 registration, prospectus, and quiet period.
https://www.sec.gov/smallbusiness/goingpublic
Investor Bulletin: Investing in an IPO
U.S. Securities and Exchange Commission · institutional
Reference for the underwriting process and what an IPO investor is actually buying.
https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_ipo
Spotify Technology S.A. Form F-1 Registration Statement (2018)
U.S. Securities and Exchange Commission (EDGAR) · institutional
Primary source confirming Spotify's April 2018 direct listing structure with no underwriter syndicate and no new share issuance.
https://www.sec.gov/Archives/edgar/data/1639920/000119312518063434/d494294df1.htm
NYSE Listed Company Manual, direct listing rules
New York Stock Exchange · institutional
Listing standards and updates on direct listings, including the later rule allowing primary capital raises within a direct listing.
https://nyseguide.srorules.com/listed-company-manual
Investor Bulletin: SPACs
U.S. Securities and Exchange Commission · institutional
Backs the description of SPAC mechanics and the 2020 to 2021 wave.
https://www.sec.gov/oiea/investor-alerts-and-bulletins/what-you-need-know-about-spacs-investor-bulletin
Initial Public Offerings: Updated Statistics
Jay R. Ritter, University of Florida · academic
Authoritative working paper series on IPO underpricing and first-day returns referenced throughout the lesson.
https://site.warrington.ufl.edu/ritter/ipo-data/
Why Has IPO Underpricing Changed Over Time?
Loughran and Ritter, Financial Management (2004) · academic
Academic backing for the structural characteristics of IPO underpricing.
Principles of Corporate Finance (Brealey, Myers, Allen)
McGraw-Hill · book
IPO chapter for underwriting mechanics, bookbuilding, and the role of secondary markets in supporting primary issuance.
Investments (Bodie, Kane, Marcus)
McGraw-Hill · book
Reference for primary vs secondary markets, exchanges, OTC trading, and liquidity definitions.
Apple Computer Inc. Form S-1, December 1980
U.S. Securities and Exchange Commission · institutional
Primary historical source for the Apple IPO at 22 dollars per share on December 12, 1980.
Apple Goes Public (case study)
Stanford Graduate School of Business · academic
Background on the 1980 Apple IPO, the underwriters Morgan Stanley and Hambrecht & Quist, and the cash raised.
FINRA Rule 5131: New Issue Allocations and Distributions
Financial Industry Regulatory Authority · institutional
Reference for the standard 90 to 180-day lockup framework around new issues.
https://www.finra.org/rules-guidance/rulebooks/finra-rules/5131