The IPO boom is returning, with SpaceX and OpenAI on investors’ 2026 radars. But be cautious about what you purchase
In 1999, stock buyers were presented with a plethora of new options as U.S. companies went public at a near-record pace. The group included names such as and , which, for those who bought them on the first trading day, have yielded .
Presently, the IPO market is experiencing a resurgence. Although 2026 is unlikely to rival the landmark year of 1999, when 476 companies went public, investors will have far more choices than they did four years prior, when only 38 firms conducted an IPO. Those poised to debut this year include the titans and OpenAI.
“We will witness some companies going public that will shape the American technology and economic landscape over the next decade,” states Matt Kennedy, a senior strategist at Renaissance Capital.
All of this is appealing to investors eager to get an early stake in the next or . However, as history demonstrates, there is much to make those eyeing first-day share purchases think twice.
More IPOs, more duds
Jay Ritter, a soft-spoken emeritus professor at the University of Florida, has earned the moniker “Mr. IPO” due to his in-depth research on initial public offerings. His data indicates that new offerings outperform the overall market in certain years, but the opposite holds true in other years—especially during years with a large number of IPOs.
While Nvidia shares turned out to be a success, the same couldn’t be said for the entire class of 1999 IPOs. In fact, that year newly public companies achieved three-year returns of -48%. This figure is particularly sobering because Ritter’s metric is calculated from the first-day closing price (which is nearly always higher than the official offer price) and excludes non-traditional IPOs such as reverse mergers.
For those inclined to write this off as ancient history—after all, many members of the 1999 IPO class were severely hit by the —2021 offers another cautionary example. That year, 311 companies went public—a surge not seen in 20 years—but their combined three-year returns stood at -49%. The reason for this is not overly surprising.
“When every IPO is soaring, that’s when you see hasty deals being put together,” remarks Kennedy, highlighting that smaller, unprofitable companies that wouldn’t typically qualify can manage an IPO in such a climate. He further notes that investors face an additional challenge during IPO bull markets because even robust companies tend to list at valuations that are hard to justify, increasing the likelihood of a future decline.
The bottom line is that IPO booms present investors with more opportunities, but also a greater risk of making a misstep. Meanwhile, companies that go public during lean years are more likely to be built to endure.
19%
Average first-day return to IPOs, 1980-2025 (minimum offer price: $5/share)
$1.19 trillion
Aggregate first-day IPOs over that period
Source: Jay Ritter, U of Florida
Over the years, the route to going public has also evolved. According to Ritter, companies that debuted in the 1980s and 1990s were generally younger than today’s IPO participants but also more likely to be profitable. However, surprisingly, Ritter asserts that profitability at the time of an IPO is not a significant predictor of future success. He states that company sales are far better indicators, and firms with annual revenues of $100 million or more are more likely to perform well over the long term compared to those that don’t.
When to buy, what to expect
Any investor who has attempted to purchase a newly listed stock has likely faced a familiar frustration: Even if they try to buy it immediately when the stock lists, the price they see from their brokerage is higher than the official listing price.
This happens because the banks underwriting the stock offer the listing price to large clients, leaving retail investors to compete for shares on the open market. Those seeking a better price can do so by getting in even earlier—through a private sale or during a company’s pre-IPO “road show”—but this is easier said than done.
According to Glen Anderson of Rainmaker Securities, which brokers private-share transactions, it’s possible to acquire shares of companies like SpaceX or OpenAI, but it typically demands an investment of $250,000 or more.
However, for the majority of investors who will acquire shares on the open market, timing can still matter. There’s no advantage to trying to buy a stock right when it lists, notes Kennedy of Renaissance, adding that it might even be wise to buy it at the end of the day or the day after the IPO.
To truly gauge a stock’s value, it usually requires waiting much longer for the situation to stabilize. Ritter argues that a newly public company’s first earnings report isn’t particularly informative, noting that analysts and corporate executives are highly motivated to meet expectations—meaning a firm will take any measures necessary to do so. He states that a company’s true investment potential will become evident after six months, when insiders are permitted to sell their shares—after which the share price will reflect the company’s fundamentals rather than IPO hype.
With all that in mind, the next Nvidia is likely among this year’s IPO candidates, and for those wanting to buy it on its debut day, the best method is still traditional research, says Anderson.
“You can hit the buy button as soon as a new stock opens,” he states. “Or you can do the groundwork to determine what a stock is truly worth compared to its peers and valuation, and wait for the price you desire. Otherwise, you’re simply taking a gamble.”
This article appears in the February/March 2026 issue of with the headline “IPO boom times are back—but be cautious about what you buy.”