IPOs Highest Returns Since… DotCom Bubble

Recently Door Dash and Airbnb (among others) have had some crazy opening day stock returns. This isn’t just a two stock phenomenon…. Here are the average IPO opening day returns over the last few decades.

We haven’t quite in 1999 territory, but we are getting there. You can read more in the article here.

The real issue is that IPOs underperform for up to three years after they go public. This mostly happens because there are a lot of people looking to cash out and that pushes the price down. Additionally, companies don’t randomly pick when to IPO. They do so when they can sell it for the best price.

The biggest question is what this means for the overall market. It would seem to indicate people are overly optimistic.