The Reuters analysis of the 50 largest IPOs by valuation over the past five years found that roughly three out of four underperformed the benchmark S&P 500 index. While these listings generated excitement and lofty valuations ahead of their market debuts, many failed to deliver sustained returns for investors who bought at or shortly after the IPO.
An investor who purchased shares in each of the tracked IPOs at the offer price would have earned an average return of 27% through May 21. Over the same periods, the S&P 500 delivered an average gain of 53%. The analysis assumed investors could access shares at the IPO price — an opportunity that is often limited for retail investors.
Returns were even weaker for investors who bought into the hype during the first day of trading, when prices frequently surged sharply above the IPO level.
A market expert said investors typically profit only when they gain exposure before a company goes public.
SpaceX’s upcoming listing is expected to reignite enthusiasm around high-growth technology and artificial intelligence-linked businesses. OpenAI and Anthropic could follow with public offerings as investor appetite for AI-related companies remains strong amid record highs in U.S. equities.
The Elon Musk-led space exploration company filed its prospectus on Wednesday and could begin trading as early as June 11 under the ticker “SPCX.” Musk is also making shares available to retail investors through platforms such as Robinhood and SoFi, potentially allowing broader participation at the IPO price.SpaceX is targeting a valuation of nearly $1.75 trillion, which would eclipse all previous Wall Street listings. However, analysts caution that massive valuations do not necessarily translate into strong long-term returns.
At the expected valuation, the company would carry a price-to-sales multiple approaching 100, far above chipmaker Nvidia’s ratio of around 24. The Elon Musk-led company lost nearly $5 billion last year.
While these companies often have compelling growth narratives, investors must account for execution risks and uncertain future outcomes.
Among the standout performers in recent IPO history were AI-focused semiconductor companies. Astera Labs has surged more than 700% since its 2024 debut, while Arm Holdings has climbed roughly 400% since listing in 2023. Both significantly outperformed the S&P 500.
Reuters also pointed to Cerebras Systems, whose shares jumped 52% after its May 14 IPO, although the stock has since retreated sharply from its intraday highs.
Not all high-profile IPOs have succeeded. Chinese ride-hailing company Didi Global was one of the biggest disappointments. After a heavily oversubscribed 2021 IPO, the company was delisted from the New York Stock Exchange the following year and now trades over the counter at prices roughly 74% below its IPO level.
Electric vehicle maker Rivian Automotive has also struggled. Rivian shares have fallen 82% since its 2021 IPO, despite briefly becoming the second-most valuable automaker in the United States. The company continues to post heavy losses and consume significant cash reserves.
Design software firm Figma experienced a sharp rally during its market debut last July, with shares nearly quadrupling in their first trading session. However, concerns over generative AI potentially commoditising its software have pushed the stock down 35% from its IPO price.
Even some of the most celebrated IPOs have struggled to outperform the broader market over time. Chinese e-commerce giant Alibaba — holder of the record for the largest U.S. IPO by valuation — has seen its shares roughly double since its 2014 debut. Over the same period, however, the S&P 500 has gained more than 300%.
As investors prepare for SpaceX’s highly anticipated debut, Reuters’ findings serve as a reminder that excitement surrounding headline-grabbing IPOs does not always translate into market-beating returns.