1 month ago
Research Advises Caution on IPO Investments
Investing in initial public offerings (IPOs) can be exciting, but research shows that many IPOs don't perform well over the long term.
While IPOs often have big first-day gains, these benefits usually go to big investors, not regular people.
In India, many companies are planning to go public, but experts say investors should be careful.
They should wait for the hype to die down and look at the company's value and fundamentals before investing.
This way, they can avoid making impulsive decisions and find better investment opportunities.
IPOs often have big first-day gains, but these benefits mostly go to institutional investors.
Many IPOs underperform in the long term, making them risky for retail investors.
India's IPO market is expected to raise $20 billion in 2026, with over 250 companies planning to go public.
Experts advise investors to wait for the initial hype to fade and assess the company's fundamentals before investing.
Lock-up periods can impact stock prices, often leading to declines when they expire.
- Who
- Investors, particularly retail investors and institutional investors
- What
- The caution against investing in every IPO due to potential long-term underperformance
- Where
- Global markets, with a focus on India's IPO pipeline
- When
- Current and projected IPO market trends in 2026
- Why
- To advise investors on the risks and benefits of IPO investments, emphasizing valuation discipline over FOMO
Pro-IPO Investment
Cautious IPO Investment
First-Day Gains
Pro-IPO Investment
First-day gains are significant and worth chasing for quick profits.
Cautious IPO Investment
First-day gains mostly benefit institutional investors, not retail investors.
Long-Term Performance
Pro-IPO Investment
IPOs can lead to long-term gains if invested in quality companies.
Cautious IPO Investment
Many IPOs underperform in the long term, making them risky investments.
Investment Strategy
Pro-IPO Investment
Investing in every IPO can capture potential high returns.
Cautious IPO Investment
Selective investment based on valuation and fundamentals is more prudent.
Key facts
- Average First-Day Gains (US IPOs)
- 18-19% since 1980, over 60% during the dot-com boom
- Projected IPO Fundraising in India (2026)
- $20 billion
- Lock-Up Period Impact
- Stock prices often decline when lock-up periods expire
- Underperformance of IPOs
- Newly listed companies underperform comparable firms by 5% annually over five years
- Number of Companies Preparing to Go Public in India
- More than 250











