<\/p>\n
Mega IPOs from SpaceX, Anthropic, and OpenAI are already turning heads on Wall Street and Main Street, expected to fetch some of the steepest valuations in the history of U.S. markets.<\/p>\n
However, those banking on these IPOs being a guaranteed payday might want to revisit those assumptions. Despite all the buzz around these forthcoming listings, available market data suggests that major tech IPOs have produced less than optimal results.<\/p>\n
What does the data say about major tech IPOs?<\/p>\n
Recently, Truist’s Keith Lerner took a look at 30 major IPOs in the software and tech space. Among the list were tech goliaths such as Facebook, Twitter, Alibaba, and others. <\/p>\n
Notably, all 30 of them experienced a significant drawdown at some point in their first year of trading, even if they showed strength out of the gates. The median year 1 drawdown was 54% for the firms listed.<\/p>\n
In other words, tech IPOs sometimes start hot, but very few stay hot. In fact, 12 months after IPOs, Lerner found that the median new listing lost 9%. Just 43% of those equities were in the green.<\/p>\n
Another data set supports IPO FUD<\/p>\n
Separate data compiled by ValueAddVC.com’s Trace Cohen looks at an even bigger stack of tech firms; 155 VC-backed firms, to be particular. Within that crop, the median 1-year return among 127 traditional IPOs was -6%. <\/p>\n
Cohen’s analysis showed that while returns from tech IPOs circa 2010 to 2015 were especially strong, results have varied since. That might be due to more unprofitable firms testing the market than in the past. Not only that, but a large number of more recent IPOs have come at steep valuations, particularly the ones during 2020 and 2021, when zero interest rate policy (ZIRP) had a distorting impact on valuations. <\/p>\n
In fact, virtually all of the “biggest losers” on Cohen’s list are from that era. Among them are total losses such as the $14.2 billion Wish (ContextLogic) IPO, the $5.7 billion Desktop Metal debut, and the failed $9 billion WeWork listing.<\/p>\n
Maybe the sole consolation is that, over the long run, the average total return of those 152 companies has been 388%. 90 of those firms are above their IPO price, and ones like Shopify (+10,924%) and Palo Alto Networks (+7,079%) have appreciated considerably since their listings.<\/p>\n
Why this data could be a warning<\/p>\n
Available data shows that IPOs can generate quick speculative returns. However, as soon as the hype around a new listing dies down, so too does its value. That’s important to remember as mega IPOs like SpaceX, Anthropic, and OpenAI make a rush for the public markets. <\/p>\n
Up to this point, everyday Americans have played no role in the price discovery in these aforementioned firms. Yet, they will arrive on Wall Street with some of the steepest valuations we’ve ever seen.<\/p>\n
The aforementioned data sets show that all IPOs, even big ones, can deliver mixed results after their listing. Investors interested in these $1 trillion listings might tread lightly if they are considering playing the field.<\/p>\n
It’s not to say that these firms might not be able to generate profits (they currently don’t) and continue to grow at a significant enough rate to justify their steep valuations, but investors should reconcile past data before jumping in.<\/p>\n
#Major #tech #IPOs #fetch #mixed #results #remember #SpaceX #OpenAI #listings #loom<\/p>\n","protected":false},"excerpt":{"rendered":"
Mega IPOs from SpaceX, Anthropic, and OpenAI are already turning heads on Wall Street and…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[259],"tags":[13908,1039,13910,4315,2313,6806,406,13909,1044,1041,317],"_links":{"self":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/7941"}],"collection":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=7941"}],"version-history":[{"count":0,"href":"https:\/\/stock999.top\/index.php?rest_route=\/wp\/v2\/posts\/7941\/revisions"}],"wp:attachment":[{"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=7941"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=7941"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stock999.top\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=7941"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}