When a company everybody's heard of goes public, it's suddenly everywhere. The coverage spikes. The CEO is out there talking about how great this opportunity will be. It feels like a moment. Something worth being a part of.
Investors gravitate toward companies getting media attention, not because the fundamentals necessarily earned it. The headlines simply trigger that fear of missing out mentality. It all looks like great information, but is it?¹
The marketing machine behind an IPO is real and intentional. It's built to create momentum and a sense that this matters now. And most individual investors don't even get a chance to buy at the open. In this gap, between the buzz and the balance sheet, is where the breakdown starts.
The Period Before the Opening Bell
By the time a company rings the opening bell to become a publicly traded company, chapters of the story have already been told, and with it a lot of value.
The journey starts years earlier, in private markets with nobody watching. Founders, employees, and early venture investors build the company from nothing. They take real risk in the years when the business could just as easily fail. In 1980, the median company going public had about $16 million in revenue, roughly $64 million in today's dollars. By 2024, that number had climbed to $218 million.⁵ That entire climb, from nothing to over $200 million, happens before the public ever gets a look.⁵'⁶
Then comes the roadshow. The company's investment bank pitches big institutional investors and asset managers, testing the appetite at different price points. All in an effort to set the offering price. By the time that price becomes public, roughly 90 percent of the shares are already spoken for.²
Individual investors typically get in after both these groups. Once trading opens. Not before.
The History Behind the Headlines
The IPOs that double on day one make the headlines. Flashy name, big story, big personality. It's just not an interesting headline when something stays flat or opens down, so those don't get the airtime. The entire narrative about "how IPOs perform" gets written by a small, loud minority of outliers, the biggest winners and losers, while the majority sit quietly in between and never make your feed.⁴
And the story is actually even more complex than it appears on the surface. Insiders and early investors are typically restricted from selling their shares for the first 90 to 180 days after the company goes public. When that lockup expires, a wave of shares can hit the market in a short time as the people who took the real risk years earlier are finally able to cash out for the first time. That kind of concentrated selling can create real downward pressure on the stock, right as new investors are getting comfortable.⁴
The day-one headline leaves out a lot of the details. When we look at the story over a 3-year timeframe, some interesting statistics stand out.
The Long Game Tells a Different Story
Here's where the real disconnect lives. That first-day pop everyone chases is real. IPOs have averaged a 19 percent gain from offering price to close since 1980, across more than 9,000 deals, according to a University of Florida study.³ But the gain goes to the institutional investors who get in at the offering price, typically not the individual public investor.
But fast forward three years, and the story flips. Roughly 56 percent of IPOs bought at the offer price are down after three years.⁷'⁸ That number climbs to 57 percent after five. And if you chase that first day pop and buy in at the first day's closing price instead, the numbers get worse with 60 percent underwater at both the three and five year mark.⁷'⁸
The relationship between hype and long-term results doesn't always move together. Companies generating the most media buzz and investor excitement are often the ones delivering the most disappointing long-term results.
The history of more than 9,000 IPOs over nearly 50 years tells a story worth listening to. There's a lot of day one risk, when you know the least. A cautious view with three years of data typically provides a broader picture, and enough information to make a more informed decision.
Wait for the data, and you've usually missed the initial pop. But start chasing the pop, and you're betting against the odds. Sure, some people win that bet. Statistically, most don't.
Believing In vs. Buying In
A business can be genuinely innovative, well-run, and capable of reshaping its entire industry, and still be a bad investment at the price you'd pay for it on day one. Believing in a company and having an actual investment thesis at a specific price are two completely different things.
At IPO, shares are priced against future growth expectations, and when enthusiasm runs hot, that anticipation gets baked in aggressively. Buy after the pop, and you're betting the company grows even faster than what's already reflected in the price.
There's a name for why people do it anyway, it's called familiarity bias. The people most excited about a company going public are often its most loyal customers. That personal connection can quietly override the price discipline that makes investing actually work over time.
Final Thoughts
Warren Buffett put it simply. If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes. That's the whole IPO question in one sentence. A 10 minute decision can be made with minimal information, low data, heavy emotion. But a 10 year decision takes time, thought, strategy.
A few questions worth asking before interest turns into ownership.
What percentage of your overall portfolio would this represent?
Are you investing in the business, or the story around it?
Would you still want to own this in five years, not just this week?
Would waiting 3 years for more information make me feel better or worse?
What's the alternative, given everything else around you?
Chasing the IPO pipeline has real risk. And when it comes to finances, more data and lower emotions tend to be a good combination for long-term success.
If you have questions about how a specific opportunity fits into your bigger picture, reach out. We are proud to be your financial friend. And clarity starts with a simple conversation.
1 SavantWealth.com, February 19, 2026.
2 Fidelity.com, 2026.
3 Warrington.UFL.edu, February 25, 2026.
4 ResearchGate.net, July 2026.
5 CarsonGroup.com, December 29, 2025.
6 CNBC.com, October 7, 2025.
7 PipelineRoad.com, March 5, 2026.
8 NovelInvestor.com, June 10, 2026.