IPOs are generally not a good investment, at least not relative to average market return:
> However, a year later, we see that the majority of companies are either outperforming or underperforming the market by more than 10%. We also see that more companies are underperforming than beating the index (the red bars stretch below the 50% line).
> That seems to indicate that for some companies, the initial IPO enthusiasm wanes or expected earnings are not met, and investors reprice the IPO to reflect the actual, slower growth of the company.
> Three years after their IPO, we calculate that almost two-thirds of IPOs are underperforming the market, with most (64%) more than 10% behind the market’s returns.
> 56% of IPOs bought at the offer price lost money after 3 years. That number rises to 57% after five years. The numbers are higher when bought at the first day closing price: 60% lost money after 3 and 5 years. Worse than a coin flip.
> Only 19% of IPOs doubled or more after three years and 22% after 5 years when bought at the offering price. The numbers were worse when bought at the closing price.
> Of course, the lottery-like returns were possible, but it amounted to about 0.4% of all IPOs after 3 years and 1% after five years.
Interview with a researcher that has looked at IPOs over the last few decades:
> We’ve previously compared IPOs to lotteries that are prone to inflated valuations and low returns. Today we welcome “Mr. IPO,” Professor Jay Ritter onto the show for a deeper dive into IPO performance, for his insights into SPACs, and to hear his research into why economic growth doesn’t correlate with stock returns. Early in the episode, Jay unpacks how long-term IPO returns perform against first-day trading. While exploring the role that venture capital plays in tech IPOs, Jay talks about why negative earnings don’t affect tech IPOs in the short-term before sharing how skewness factors tend to impact young companies. Reflecting on how IPOs are usually underpriced, Jay discusses how the interests of companies are not aligned with the interests of IPO underwriters. After looking into IPO allocation, Jay compares the 2020 ‘hot IPO market’ with the internet bubble of the late 90s. Later, we ask Jay about what special-purpose acquisition companies (SPACs) are and why they’ve exploded in recent years. His answers highlight their investing benefits, risks, and why SPACs might be a better option for companies than IPOs. We examine how SPACs have historically performed and then jump into our next topic; why economic growth isn’t a good indicator that a country is worth investing in. He touches on why returns don’t correlate with economic growth, the place of capital gains and dividend yields when investing abroad, and how innovations in an industry can lead to higher stock returns. We wrap up our conversation by asking Jay for his take on whether the stock market is efficient before hearing how he defines success in his life. Tune in to hear our incredible and informative talk with Jay Ritter.
The IPO was meant for the VCs to cash out as all fundamentals were completely irrational, but seems like no one cares about cash flow and profitability anymore during QE times. Dumb money will keep being dumb I guess
My understanding is that an ideally priced IPO should not move much from the opening price in the near term. If it pops it means they left money on the table. If it drops, then I am not sure what the implication is exactly?
Now I think SpaceX is massively overhyped, but is the share price returning to IPO opening not just a sign that the banks accurately estimated something?
Not if it's going to keep dropping, which I think is fair to assume as people wake up to the fundamentals after the hype is done (not financial advice)
Typical IPO pattern. Hyped IPOs shoot up and then correct, some correct more than others. Traders take their profits. Nothing new here, just bigger headlines because it's a big name. The bigger the name, the bigger the hype.
If the IPO can't find institutional buyers at the price and has to resort transferring the initial shares directly to the public, safe to assume they've hyped the public into being the bag holder. What SpaceX did is rare for a reason.
As a scientific adventure, SpaceX is a worthy company full of awesome people. But the management and VCs is another story, as usual. To price it at a market cap of $1.8T, somewhere double that of Walmart is insane.
ffs, wake me up when it's at least 10% below what it IPO'd for. The idiotic tulip mania that followed in the few days after it floated was noise, but as of today, it seems the IPO price was pretty much right. However, endless headlines about the price crashing etc.
From a fundamentals perspective, it's an insane price, obviously. But the narrative that it's all coming crashing down is obviously not correct (today).
“Shocking nobody” I would add… This is an obvious Musk scam and anyone with financial knowledge called it as such ever since it’s been on the table. Why else lobby and change the NASDAQ listing rules for instance?
I always wonder why not more companies are using more creative approaches like Google's Dutch auction to set their IPO price.
It seems direct listings gained some popularity but overall most companies seem to rely on the traditional underwriter model.
According to [0] -
> 22 companies went public on major exchanges using IPO auctions in the U.S. between 1999-2008, but there have been none since then, as of May 2025. Starting in 2018 when Spotify went public, there have been at least 20 companies that have gone public using a direct listing. With both IPO auctions and direct listings, underwriters do not have discretion to allocate shares to their preferred clients.
Anyone buying IPO for short term gain would have exited at initial spike, others (like me got in at allocation price) will be holding for a decade or two so this is noise, expected not sure why it posted here, do we post every tech stock intra day price move
Maybe this has to do with the technical unfeasibility of sending human to Mars and back to earth while keeping them alive ? Throwing billions at it won't make it happen magically.
SpaceX, despite its name is an AI company, supposedly. Its S-1 states that the company estimates its total addressable market (TAM) at $28.5 trillion, of which $26.5 trillion, or 92.98%, is expected to come from AI.
SpaceX is an AI company without a frontier model. Until Jan 2026 SpaceX was an aerospace company. Then xAI was merged into SpaceX on January 30, 2026, so SpaceX became an AI company less than 6 months ago.
46 comments
[ 2.7 ms ] story [ 58.0 ms ] thread> However, a year later, we see that the majority of companies are either outperforming or underperforming the market by more than 10%. We also see that more companies are underperforming than beating the index (the red bars stretch below the 50% line).
> That seems to indicate that for some companies, the initial IPO enthusiasm wanes or expected earnings are not met, and investors reprice the IPO to reflect the actual, slower growth of the company.
> Three years after their IPO, we calculate that almost two-thirds of IPOs are underperforming the market, with most (64%) more than 10% behind the market’s returns.
* https://www.nasdaq.com/articles/what-happens-to-ipos-over-th...
> 56% of IPOs bought at the offer price lost money after 3 years. That number rises to 57% after five years. The numbers are higher when bought at the first day closing price: 60% lost money after 3 and 5 years. Worse than a coin flip.
> Only 19% of IPOs doubled or more after three years and 22% after 5 years when bought at the offering price. The numbers were worse when bought at the closing price.
> Of course, the lottery-like returns were possible, but it amounted to about 0.4% of all IPOs after 3 years and 1% after five years.
* https://novelinvestor.com/the-hype-and-hot-air-around-ipos/
Interview with a researcher that has looked at IPOs over the last few decades:
> We’ve previously compared IPOs to lotteries that are prone to inflated valuations and low returns. Today we welcome “Mr. IPO,” Professor Jay Ritter onto the show for a deeper dive into IPO performance, for his insights into SPACs, and to hear his research into why economic growth doesn’t correlate with stock returns. Early in the episode, Jay unpacks how long-term IPO returns perform against first-day trading. While exploring the role that venture capital plays in tech IPOs, Jay talks about why negative earnings don’t affect tech IPOs in the short-term before sharing how skewness factors tend to impact young companies. Reflecting on how IPOs are usually underpriced, Jay discusses how the interests of companies are not aligned with the interests of IPO underwriters. After looking into IPO allocation, Jay compares the 2020 ‘hot IPO market’ with the internet bubble of the late 90s. Later, we ask Jay about what special-purpose acquisition companies (SPACs) are and why they’ve exploded in recent years. His answers highlight their investing benefits, risks, and why SPACs might be a better option for companies than IPOs. We examine how SPACs have historically performed and then jump into our next topic; why economic growth isn’t a good indicator that a country is worth investing in. He touches on why returns don’t correlate with economic growth, the place of capital gains and dividend yields when investing abroad, and how innovations in an industry can lead to higher stock returns. We wrap up our conversation by asking Jay for his take on whether the stock market is efficient before hearing how he defines success in his life. Tune in to hear our incredible and informative talk with Jay Ritter.
* https://rationalreminder.ca/podcast/139
Picking individual winning stocks can be hard:
* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street
Now I think SpaceX is massively overhyped, but is the share price returning to IPO opening not just a sign that the banks accurately estimated something?
ffs, wake me up when it's at least 10% below what it IPO'd for. The idiotic tulip mania that followed in the few days after it floated was noise, but as of today, it seems the IPO price was pretty much right. However, endless headlines about the price crashing etc.
From a fundamentals perspective, it's an insane price, obviously. But the narrative that it's all coming crashing down is obviously not correct (today).
It seems direct listings gained some popularity but overall most companies seem to rely on the traditional underwriter model.
According to [0] -
> 22 companies went public on major exchanges using IPO auctions in the U.S. between 1999-2008, but there have been none since then, as of May 2025. Starting in 2018 when Spotify went public, there have been at least 20 companies that have gone public using a direct listing. With both IPO auctions and direct listings, underwriters do not have discretion to allocate shares to their preferred clients.
[0] https://en.wikipedia.org/wiki/OpenIPO
Something like 100k flights cancelled. Upgrading the planes to have starlink is onerous, high idle/offline time, and capital intensive.
The total potential market for Starlink shrinks by at least a few hundred thousand people each week.
I didn't buy a single share.
SpaceX is an AI company without a frontier model. Until Jan 2026 SpaceX was an aerospace company. Then xAI was merged into SpaceX on January 30, 2026, so SpaceX became an AI company less than 6 months ago.