Should You Buy the IPO? What Market History Says Before You Click Buy

Few market events attract attention like a company going public. An initial public offering moves price discovery out of private negotiations and onto an open exchange, and for a short window the stock becomes the only thing anyone wants to talk about. 2026 has supplied a steady stream of them: SpaceX and SK Hynix have already listed, and OpenAI and Anthropic have both filed confidentially.

What gets far less coverage is the part that actually determines whether an IPO was a good investment: the one, three, and five years after the bell.

The record after the debut

The stretch right after a listing is usually the most volatile period in a stock's public life.

Uber priced at $45.00 in May 2019 and closed its first session at $41.57 — at the time the largest first-day dollar loss in U.S. IPO history. It finished 2019 at $29.74. By early August 2026 it traded around $71.61, roughly 59% above the offer price nearly seven years later, and still about 28% below its October 2025 peak of $100.10. The buyer who held did fine. The buyer who sold during any of several deep drawdowns did not.

Rivian priced at $78 in November 2021, raising $11.9 billion at roughly a $66.5 billion valuation. Within a week shares hit $172, up about 120%. As of mid-2026 the stock trades roughly 87% below the offer price, and the share count has grown about 38% since the listing — so the same share represents a smaller slice of the company than it did on day one.

SpaceX shows how fast the swing can happen now. It priced at $135 on June 12, 2026, traded as high as $193 that day, ran past $225 within days, then fell close to 50% from that high and dipped as low as $104.83 before rebounding to $138.74 on August 11, 2026. One structural detail explains a lot of it: less than 5% of shares were floated, which concentrated heavy demand into very little supply. Lockup expirations add supply later.

Uber and Rivian are not the exceptions

Across eleven of the largest U.S. IPOs on record — a list that includes Alibaba, Visa, Meta, General Motors and UPS — the average one-year forward return was -23.4% and the average maximum drawdown was -47.9%. Only two of the eleven, Enel and Deutsche Telekom, posted a positive first-year return. Figures from Morningstar Direct as of July 8, 2026, with the IPO subset ranked by proceeds from Renaissance Capital, as compiled by Mason Investment Advisory Services. Past performance does not predict future results.

Not every listing is the same kind of bet. SK Hynix raised $26.5 billion in July 2026, the largest U.S. debut ever by a foreign company, but it arrived with an operating history dating to 1983 and revenue that had tripled. That is a known business changing where its shares trade — a different proposition from a young company proving an idea in public for the first time. It is the first question worth asking about any offering.

Why people buy anyway

The pull is behavioral, not analytical.

FOMO. When a name dominates the news cycle for weeks, sitting out starts to feel like the mistake, regardless of the valuation.

An information gap. The institutions setting the offer price see financial detail that retail buyers do not. That gap is easy to underestimate in the moment.

Personalities. A charismatic founder can turn an offering into a referendum on a person rather than an evaluation of a business.

Story mistaken for evidence. Rivian was widely compared to a far larger, established EV maker at its IPO. That was a claim about what it might become, not proof of what it had already done.

And once trading starts, investors anchor to the offer price. A stock below its IPO price is not automatically broken; one above it is not automatically working. The offer price is a reference point, not a verdict.

A framework before you buy

Size it like a concentrated position, because it is one. For most investors a single IPO name belongs at 1% to 5% of total assets or less, and for plenty of households the right number is zero. Two better questions than "how much can I make": how much of this could go to zero without touching a goal inside five years, and could you hold through a 50% decline without selling at the bottom?

Know which price you are actually getting. Offer-price allocations mostly go to institutions; individuals can occasionally participate through a brokerage involved in the deal, with no guarantee of shares. Everyone else buys at whatever the open market prints, which can already be far above or below the offer by the time an order fills.

Read the S-1. It sets out the business, financials, management and risk factors. Look at revenue growth, cash flow, margins and debt, then check how the proceeds will be used — funding growth, paying down debt, or cashing out early investors and employees are three very different signals. Compare the valuation to public peers already trading.

Consider waiting. Letting the first weeks of price and volume play out costs you the early upside if the stock runs, and saves you from the drawdown if it does not. There is no universally right answer, only one that fits a specific portfolio and time horizon.

Mind the tax treatment. If shares appreciate quickly, holding period drives how the gain is taxed. That is a conversation to have while the position is being built, not after you decide to sell.

Time horizon matters more here than almost anywhere else. Someone decades from retirement has room to sit through the volatility described above. Someone already drawing down a portfolio generally does not.

The honest answer to "should you invest in an IPO" is that it depends on your horizon, your tolerance for a 50% paper loss, and how the position fits the rest of your plan — and that the historical odds over the first year have not favored the buyer.

Adapted with attribution from analysis published by Mason Investment Advisory Services. Educational content only, not investment advice.