What it is
A secondary offering, also known as a secondary public offering, involves the sale of previously issued shares by existing shareholders, such as large institutional investors, company founders, or private equity firms. Unlike an initial public offering (IPO) or a primary offering, the company itself does not issue new shares, and therefore, it does not receive any proceeds from the sale. The shares are simply transferred from one owner to another through a public market transaction.
Secondary offerings often occur after a company has been publicly traded for some time, particularly after lock-up periods expire following an IPO. These offerings can increase the float of a stock, making it more liquid, but they can also signal that large shareholders are cashing out, which might be perceived negatively by the market. While the company's total outstanding shares remain unchanged, the sudden increase in supply can put downward pressure on the stock price in the short term.
Why it matters
Secondary offerings can increase a stock's liquidity but may signal selling pressure from major holders, potentially impacting the share price. Understand who is selling and why.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice