What is a key risk associated with an IPO?

Market volatility affecting the stock price post-IPO is a key risk associated with an Initial Public Offering (IPO). After a company goes public, its stock price can be influenced by various factors, including overall market conditions, investor sentiment, and company performance. This volatility can lead to significant fluctuations in the stock price, impacting the company's market capitalization and potentially affecting its ability to raise additional capital in the future.

For instance, if the broader market experiences a downturn or if there is negative news about the company or its sector, the stock price may decline even if the fundamentals of the company remain strong. This unpredictability can discourage investors and create challenges for the company in terms of maintaining a stable stock price.

Other options do not represent the inherent risks associated with an IPO. Instant profitability is not guaranteed following an IPO, as many companies need time to establish a profitable business model in the public market. There’s also no assurance of guaranteed share price increases, as the marketplace can behave unpredictably. Lastly, while public shareholders do have a say in company decisions through voting, they do not have complete control; the management team and board of directors retain significant authority over day-to-day operations and strategic decisions.