A Note on IPOs and the Coming Wave of Mega-Listings

A handful of the most prominent private companies in the world are about to become public ones. SpaceX listed last week at a valuation near $2 trillion and the two leading AI labs, OpenAI and Anthropic, are reportedly not far behind. The press has taken to calling these “mega-IPOs,” and the level of investor interest and press coverage is something we haven’t seen in years.

Given all the headlines, we thought it would be worth explaining how we approach initial public offerings, why we have handled them the way we have, and how we are thinking about this particular crop. We don’t intend to label these companies good or bad investments. We do want you to understand the reasoning behind when we buy and when we hold off.

How an IPO actually works

An IPO, or Initial Public Offering, is the point at which a private company sells stock to the public for the first time and lists it on a stock exchange. Ahead of the offering, the company and its investment banks settle on a price and line up demand, most of it from large institutions that receive the bulk of the shares to be sold before trading even begins.

A few mechanics explain much of what you will see in the headlines:

• Float: Only a portion of the company’s shares are sold at the IPO. In the biggest deals that initial float can be a low single-digit percentage of the company. When a small float meets heavy demand, the price can spike on the first day and stay volatile well beyond it. For example, SpaceX listed at a valuation close to $2 trillion; however, the float will only be $75 billion in publicly available stock.
• The first-day pop: Offerings are often strategically priced below where the stock is expected to trade, so it tends to jump on day one. That gain mostly goes to the insiders and institutions who bought at the offer price, not to the investor buying once public trading starts.
• Lock-ups: Employees and early investors typically agree not to sell for a set period after the IPO. When those lock-ups expire, the supply of newly sellable shares often weighs on the price months later. As these shares become sellable, the float (see above) increases.

What all of these mechanics share is timing. The early days of a public company are structured to reward the people selling stock, not the people buying it.

Our traditional approach: let IPOs mature

Our long-standing practice is to let a newly public company find its footing before we commit your capital to it. We own high-quality businesses for the long term, and a company that has recently gone public rarely has enough track record for us to work with.

In its first months on the market after the IPO, the company hasn’t publicly reported quarterly earnings to its shareholders, has no history of setting and delivering on its guidance, and trades on a price driven more by structural market considerations – like float – than by results. Waiting for the IPO to “season” gives us several quarters of financial results, a clearer read on how the business actually operates, and often a more reasonable entry price once the early excitement cools and the timing of the mechanics above passes..

We would generally rather give up the first leg of a move than take on the volatility, and the risk of a permanent loss, that can often come with IPO investing.

What the historical data tells us

Our preference to wait isn’t based on a hunch or intuition; it is what the long-run data and our experience show.

Jay Ritter of the University of Florida, whose IPO database is the standard reference in the field, has documented that newly public companies tend to trail the broader market by roughly three percentage points a year in the five years after listing (Ritter, 2026). Across the 1,645 U.S. IPOs from 2012 through 2024, the typical stock rose about 23% on its first day and then trailed the market by some 25 percentage points over the next three years (Ritter, Initial Public Offerings: Underpricing, 2026).

The record for the largest deals is worse. Of the 36 U.S. companies that have gone public at $15 billion or more, only nine have beaten the S&P 500 from their first-day close, and only 17 made any money at all for the day-one buyer (Wolf, 2026). The most aggressively priced names fare the worst: since 1980, companies coming public at more than 40 times sales have fallen about 45%, on average, over the following three years (Ritter, 2026).

A study from Truist of prominent technology IPOs makes the pattern concrete. The table below shows how each stock performed at one week, one month, and three, six, and twelve months after its IPO, along with its worst drawdown during that first year (Reinicke, 2026).

Source: Truist Advisory Services. Returns measured from each company’s IPO date; rebuilt for formatting. Red denotes a negative return. Drawdown reflects the max drawdown from prior peak.

The summary rows are the part worth dwelling on. A slim majority of these stocks were higher a week, a month, and three months out, but by six and twelve months barely four in ten were higher. Every name on the list, including the eventual winners, fell at least 20% from a peak at some point in its first year, and the median first-year drawdown was 54%.

Plenty of these companies turned out to be excellent investments and are certainly painful to miss. The same list that holds Lyft and Rivian also holds Facebook, Uber, and CrowdStrike. The point is that the odds favor patience, and the most dependable way to own the winners without absorbing the worst of the losers is to wait for the business to prove itself. The “Year 1 Max Drawdown” column makes it clear, even the big winners give you an opportunity to buy at a better price than on the first day.

Why this wave is a little different

The companies driving this year’s wave are not run-of-the-mill, so they are worth a closer look.

Several of the concerns above apply to them with extra force. They are coming public at prices that dwarf what they currently earn. SpaceX is valued at ~100x sales (over twice as expensive as the most expensive company in the S&P 500 today) while still losing money, with an operating loss of about $1.9 billion in the first quarter of 2026 alone (SpaceX, 2026), as it spends heavily on satellites and AI infrastructure. OpenAI and Anthropic are growing revenue at an extraordinary clip, with reported annualized run-rates near $25 billion (Muppidi, 2026) and $47 billion (Anthropic, 2026), but both are burning through cash on computing power and are early in building the financial controls a public company needs. OpenAI has reportedly fallen short of some of its own internal targets even as it moves toward a listing (Jin, 2026).

Here is where the three stand today:

Source: company filings and press reports, 2026. Valuations reflect recent private rounds or reported IPO targets.

The structure of these deals adds another layer of risk. The public float is expected to be small, and the major index providers have been shortening the waiting period before a new company can join their indexes (Doak, 2026). Together those two facts could force index funds to buy up a large share of the available stock in a short window, propping up the early price just as the private investors who have held these shares for years look to sell. In practice, the public buyer may end up providing the exit for insiders sitting on enormous paper gains.

That’s not the whole story. These are genuinely exceptional companies. SpaceX launches more to orbit than the rest of the world combined and runs a profitable, fast-growing satellite-internet business in Starlink, and the AI labs sit at the center of a technology shift that may prove as consequential as any in our careers. One of them could well turn out to be the next Google rather than the next cautionary tale, and we take that possibility seriously.

Our point is narrower. We do not have to make that call on the first day of trading. The very qualities that make these companies compelling, their scale and the frenzy of demand around them, are what make their early trading so hard to predict. A patient investor is likely to get both a clearer view and a better price by waiting.

Where we stand

What we can promise you is consistency. We will not chase a first-day pop or buy a stock because it is on the front page. We will follow these companies closely as they go public, watching how they report, whether they deliver on what they have promised, and where their valuations settle after the initial enthusiasm fades and the lock-ups expire. If one of them eventually pairs a business we understand with a price that makes sense, we will act, on your behalf and on our own schedule.

Waiting here is a matter of judgment, the same judgment we have applied through every market cycle.

At NPF Investment Advisors, we are always happy to talk with you about any of this and what it means for your particular situation. Visit www.npfinvest.com/contact to connect with one of our advisors today.

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. It reflects our views as of June 2026, which may change. Past performance is not indicative of future results.

Sources

Anthropic. (2026, May 28). Anthropic Raises $65B in Series H Funding at $965B Post-Money Valuation. Retrieved June 16, 2026, from Anthropic: https://www.anthropic.com/news/series-h

Doak, E. (2026, June 10). Some Indexes Accelerate Entry for Massive IPOs. Retrieved June 16, 2026, from Charles Schwab: https://www.schwab.com/learn/story/some-indexes-accelerate-entry-massive-ipos

Jin, B. (2026, April 28). OpenAI Misses Key Revenue, User Targets in High Stakes Sprint Toward IPO. Retrieved June 16, 2026, from https://www.wsj.com/tech/ai/openai-misses-key-revenue-user-targets-in-high-stakes-sprint-toward-ipo-94a95273

Muppidi, S. (2026, March 5). OpenAI Tops $25 Billion in Annualized Revenue as Anthropic Gap Narrows. Retrieved June 16, 2026, from The Information: https://www.theinformation.com/articles/openai-tops-25-billion-annualized-revenue-anthropic-narrows-gap

Reinicke, C. (2026, June 9). SpaceX, Anthropic, OpenAI Can Rewrite History for Megacap IPOs. Retrieved June 16, 2026, from Bloomberg.com: https://www.bloomberg.com/news/articles/2026-06-09/spacex-anthropic-openai-can-rewrite-history-for-megacap-ipos?srnd=homepage-americas

Ritter, J. (2026). Initial Public Offerings: Underpricing. Gainesville, FL: University of Florida. Retrieved June 16, 2026, from https://site.warrington.ufl.edu/ritter/files/IPOs-Underpricing.pdf

Ritter, J. (2026). Initial Public Offerings: Updated Long-Run Statistics. Gainesville, FL: Warrington College of Business, University of Florida. Retrieved June 16, 2026, from https://site.warrington.ufl.edu/ritter/files/IPOs-long-run-returns-on-IPOs.pdf

SpaceX. (2026, May 20). SpaceX – S1 Filing.

Wolf, N. (2026, May 26). The SpaceX IPO Is a Game You Play at Your Own Risk. Retrieved June 16, 2026, from Barron’s: https://www.barrons.com/articles/spacex-ipo-buy-stock-2a4acd38?st=4SpXcL&reflink=desktopwebshare_permalink