Market Insights Correction: 👀 How to Spot an IPO Worth Buying

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Unfortunately we sent last week's Market Insights email to your inbox this morning. We've corrected that and below you can find this week's content. We hope you enjoy it!

 🌊 The 2025 IPO Wave: Winners, Losers, and What Investors Should Watch

The past few years have been quiet on the IPO front.

Sure, a few big names like Arm and Reddit grabbed headlines, but it’s been nothing like the IPO frenzy of 2017–2021, when giants like Uber, Airbnb, Spotify, CrowdStrike, Snowflake (and plenty more) all hit the public markets.

Now, though, 2025 is looking very different. Globally, the number of IPOs and the capital raised are on track to outpace the last three years combined.

And the thing is, successful IPOs attract more IPOs. Some will be genuine gems, while others, not so much.

That’s why this week, we’re digging into the IPO market, and more importantly, how you can improve your odds of spotting a winner.

🎧 Would you prefer to listen to these insights? You can find the audio version on our Spotify, Apple Podcasts or our YouTube! (Released each Monday by 5pm AEST).

This week's Market Insights is a 7 minute read! (or read the full article)

Quote of the week

“Time is the friend of the wonderful business, the enemy of the mediocre,” 

Warren Buffett

What Happened In The Markets This Week?

Here’s a quick summary of what’s been going on:

⚠️ Intel warns US stake could hurt international sales (Reuters)

• Intel’s CEO says geopolitical flare-ups and splintered supply chains could mess with Washington’s grip on the company.

• If tensions rise, expect tighter export controls, policy U-turns, or even a forced sell-off of the U.S. stake.

• Intel shares could take a hit, while rivals like AMD or TSMC might look safer by comparison. Watch for congressional noise and whether Intel keeps getting those sweet onshore incentives.

• Near-term volatility could offer tactical entry points, but long-term winners will be those diversifying manufacturing and securing resilient supply chains.

  🪙 Gold hovers near record as Fed pressure rattles markets (Yahoo)

• Trump’s anti-rate-hike criticisms are spooking investors who worry the Fed might lose its independence.
• That fear is fueling demand for gold, now flirting with all-time highs as a safety valve against political meddling.
• A strong gold bid means gold miners and ETFs shine, while risk assets and the dollar could wobble if Fed credibility slips.
• Investors are using the likes of Barrick Mining, Newmont, and gold ETFs, as hedges. Real yields (yield after inflation) and central bank backbone are now the main plotlines.
• Keep an eye on inflation surprises and Fed pushback, because both will determine whether gold’s rise is structural or a cyclical flight to safety.
  

To see our take on these and other market stories, simply check out the

full article!

• 📈 Nvidia had a smashing quarter, but those data center sales numbers are mighty concerning (Sherwood)

• 💸 🇳🇴 World’s largest sovereign wealth fund exits Caterpillar and five banks on Israel concerns (CNBC)
  

• 📦 US box factories are folding fast (Sherwood)

Now let’s dive into the main piece!

🪚 IPOs in 2025: Cutting Through the Hype

After a couple of sleepy years, the IPO market is back in the spotlight.

Just last week, two major announcements grabbed headlines:

• 💳 Swedish fintech Klarna dusted off its plans to go public
• 🧑‍💼 Trump Media revealed it’s launching a crypto company via a SPAC

So far this year, the number of U.S. IPOs is already matching the total for all of 2024. That’s a big deal given how shaky markets were earlier in the year.

US IPOs by Year - StockAnalysis.com

While not every IPO has been a home run, a few have absolutely taken off:

• CoreWeave had rough timing (its debut came just before “Liberation Day”), but since then, the stock has soared 140%.
• Circle Internet Group priced its IPO at $31, started trading at $83, and shot up to $260 within weeks. It’s since pulled back by half, but early investors are still up 3x.
• Figma went public in July at $33, opened at $115, and is now hovering around $70.
  • If you got IPO allocation, you’ve doubled your money.
  • If you bought at the open, you’re down ~40%.

✨ These kinds of standout IPOs tend to ignite investor excitement, and that ripple effect gives other companies the confidence to jump into the market.

But as the buzz builds, so does the need to separate real business potential from pure hype, which we’ll get into soon. 

🌏 Beyond the U.S.: IPOs Around the World

U.S. listings tend to steal the spotlight, and for good reason. A U.S. IPO is a global badge of credibility.

It should be no surprise then that over half of all companies going public on U.S. exchanges in 2025 are foreign firms chasing that prestige.

Elsewhere in the world, IPO momentum is picking up, but it’s not evenly spread. A few key markets are doing the heavy lifting:

• 🇮🇳 India is gearing up for a record-breaking year, with several heavyweight IPOs expected to land before December.
• 🇨🇳 Greater China, including Hong Kong, is also having a standout year—accounting for about one-third of all IPOs globally.
• 🌴 Southeast Asia (think Singapore) is seeing a small bump in activity, but that’s off a very low base. The past few years have been quiet.
• 🇬🇧 Over in Europe and the UK, things are much slower. Investors there seem to be picking their battles, backing only the most promising opportunities.

One trend that is making a surprise return is SPAC (Special Purpose Acquisition Company) deals. Those blank-check companies used to fast-track listings.

Crypto-related SPACs seem to be powering most of these deals, fueled by the Genius Act and growing interest around Bitcoin Treasury Companies.

There is more to an IPO than meets the eye,

and the best investors know how they really work.

Those who don't, often get burnt. 

Our full piece covers everything you need to know,

and 4 crucial things to assess when considering an IPO.  

📜 Historical IPO Returns: Hits, Misses & Lessons Learned

Two of the most successful companies to go public in the last 20 years are Alphabet (formerly Google) and Meta (formerly Facebook). 

Here’s what happened to their stock prices during the first five years:

Alphabet and Meta: First 5 Years - TradingView

Both companies were successful, growing and profitable when they listed, but their stock price moves couldn’t be more different. 

Google’s shares traded higher from day one, while Facebook’s stock dropped 40% in the first few months before recovering.

✨ The lesson here is that even with top-tier companies, sentiment and valuation can heavily sway the short-term outcome.

Finance professor Jay Ritter (University of Florida) has built the go-to database on IPO performance, covering 9,181 U.S. IPOs between 1980 and 2023. His findings are eye-opening:

• The average “first-day pop” (IPO price → close of day one) is ~19%.
• The average 3-year return is also just ~19%—well below the broader market.
• Roughly 70% of IPOs underperform—it’s the rare outliers that drag the averages up.

So, while IPOs get a ton of hype, the average results are, frankly, underwhelming.

The data does show clear patterns. IPOs perform much better when the company:

• 📊 Has $100M+ in pre-IPO revenue 
• 💵 Is already profitable, even with revenue under $100M 
• 💻 Operates in tech, though note: pre-dot-com IPOs were a graveyard.

The bottom line is that if you’re chasing tiny, speculative IPOs, the odds are stacked against you. But the winners tend to emerge from those that start public life as profitable, scaled-up businesses. 

💡 The Insight: Let the Market Come to You

Typically, opportunities are created for investors when the market underestimates a company’s potential - or when other investors panic or overreact to negative news. 

As Warren Buffett said, "Be greedy when others are fearful and fearful when others are greedy."

An IPO is the final step in a months-long marketing campaign, so the odds of others being fearful are low. However, if it’s a quality company, and it’s trading below a fair value that you have confidence in, there’s no reason not to invest.

There’s also every chance that news and sentiment bring the price below your fair value estimate after the IPO. Irrational buying in the first few days and weeks can lead to irrational selling later.

You can keep track of recent IPOs with this stock screener by saving it and then adjusting the ‘Days Since Listing’ metric under Advanced Filters. The screener below filters for recent IPOs with strong Future and Health scores.

IPOs in the last 12 months - Simply Wall St

Check it out! And then, add any stocks you’re interested in to your watchlist, set your fair value, and wait patiently for the right price where the odds of success are in your favor. 

💬 Join the discussion by leaving a comment!

Have you invested in any IPOs,

and were you successful?

Key Events During the Next Week

Tuesday

• 🇪🇺 Eurozone Inflation YoY Flash
  • 📉 Forecast: 2.1% (Previous 2%)
  • ➡️ Why it matters: A slight uptick keeps pressure on the ECB and may delay rate cuts.

Wednesday 

• 🇦🇺 Australia GDP YoY
  • 📉 Forecast: 2.1% (Previous 1.3%)
  • ➡️ Why it matters: A surprise rebound may reduce the case for RBA easing and lift the Aussie dollar.
    
• 🇺🇸 US JOLTs Job Openings
  • 📉 Forecast: 7.3m (Previous 7.44m)
  • ➡️ Why it matters: Fewer job openings suggest cooling demand for workers, adding to signs of labor market softness.

Friday

• 🇨🇦 Canada Unemployment Rate
  • 📉 Previous: 6.9%
  • ➡️ Why it matters: A high and possibly rising unemployment rate could push the BoC closer to cutting rates.
    
• 🇺🇸 US Nonfarm Payrolls
  • 📉 Forecast: 50k (Previous 73k)
  • ➡️ Why it matters: A continued hiring slowdown adds to evidence that the US labor market is losing steam.
    
• 🇺🇸 US Unemployment Rate
  • 📉 Forecast: 4.2% (Previous 4.2%)
  • ➡️ Why it matters: A steady print masks underlying job market weakness, keeping the Fed cautious.

Earnings season continues with some important software companies due to report. The largest include:

• Salesforce
• Broadcom
• Copart
• Kroger
• Zscaler
• Figma

Until next week, invest well.

Simply Wall St