Are IPOs Still Hot? A Look at Recent Statistics

You would not be crazy to think that IPOs are good investments.  The media is constantly crowing about high-flyers like Beyond Meat $BYND and Crowdstrike $CRWD and their outperformance.  However, I have noticed recently that quite a few IPOs are trading beneath their opening range, especially after their first or second earnings reports. 

Which brings me to the question, how have IPOs been performing lately?

Over the 3 months starting in May, there have been 51 companies that have IPOed, everything from biotechs to healthcare tech to video streaming to ride-sharing. 

The best performer was plant-based meat maker Beyond Meat $BYND, who IPOed on May 2nd and whose stock when up almost 500% before cooling off.  Here's the daily chart.

$BYND daily chart since IPO



The most visible IPO was Uber $UBER on May 10th, which most people probably agree was NOT a success for the retail investor.  Anyone who bought Uber shares is currently underwater.  Here is the daily chart.

Uber daily chart since IPO


So what about the others?  Let's compare the 51 IPOs that happened in May-July and compare their performance.

So to calculate how IPOs have performed, let's take every stock that IPOed and pretend that we bought it at the exact price it was first listed on the public market.   Let's assume you put the same dollar amount into each investment.  For simplicity, let us say you bought $10,000 of stock, regardless of the stock price, at the opening print, and held onto the investment to this day.

Results for the 51 companies that IPOed May-July


The results would be:

[[...drumroll please...]

You would be DOWN -60% or -$6,000.

Ouch.

The number of IPOs that are trading below their opening price are twice as many as the number of IPOs trading above their opening price.

So, maybe not surprising, IPOs seem to be over-hyped coming onto the public market, and public market investors are getting dumped on after that initial hype is over.

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Comments

Nana Yaw posted -
Nice research you put together there, think IPO's lost momentum after $BYND cooled off

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