IPO Stock Performance Analysis

What if I told you that 𝐚𝐧𝐲𝐨𝐧𝐞 could be a venture investor - even in the public markets? Venture capital rests on one of the most important ideas in investing: 𝐭𝐡𝐞 𝐩𝐨𝐰𝐞𝐫 𝐥𝐚𝐰. A small handful of companies generate the vast majority of returns, while most deliver little to no upside. That’s why venture outcomes are so widely dispersed - and why aiming for “average” in VC rarely compensates for the risk or illiquidity. What’s less well understood is that this exact same phenomenon shows up in the 𝐩𝐮𝐛𝐥𝐢𝐜 𝐦𝐚𝐫𝐤𝐞𝐭𝐬 once VC-backed companies IPO. In fact, the pattern is even more glaring... I analyzed 𝟒𝟏𝟒 𝐍𝐨𝐫𝐭𝐡 𝐀𝐦𝐞𝐫𝐢𝐜𝐚𝐧 𝐕𝐂-𝐛𝐚𝐜𝐤𝐞𝐝 𝐈𝐏𝐎𝐬 𝐟𝐫𝐨𝐦 𝟐𝟎𝟏𝟎 𝐭𝐨 𝟐𝟎𝟐𝟐. I then ranked the companies by their year-3 post-IPO returns into deciles, and tracked how each year-3 decile performed at year-2, year-1, 6 months, and 1 day after IPO. The results were eye-opening: • 𝐓𝐡𝐫𝐞𝐞 𝐲𝐞𝐚𝐫𝐬 𝐩𝐨𝐬𝐭-𝐈𝐏𝐎, 𝟓𝟎% 𝐨𝐟 𝐜𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 𝐭𝐫𝐚𝐝𝐞𝐝 𝐛𝐞𝐥𝐨𝐰 𝐡𝐚𝐥𝐟 𝐭𝐡𝐞𝐢𝐫 𝐈𝐏𝐎 𝐯𝐚𝐥𝐮𝐞. Many of the private-market “power-law winners” failed to sustain their outperformance in the public markets.    • 𝐎𝐧𝐥𝐲 𝐭𝐡𝐞 𝐭𝐨𝐩 𝐝𝐞𝐜𝐢𝐥𝐞 𝐭𝐫𝐮𝐥𝐲 𝐦𝐚𝐭𝐭𝐞𝐫𝐬. Three years in, only the top three deciles delivered positive returns, with the top decile soaring +𝟒𝟎𝟎% - 𝐧𝐞𝐚𝐫𝐥𝐲 𝟒× 𝐭𝐡𝐞 𝐧𝐞𝐱𝐭-𝐡𝐢𝐠𝐡𝐞𝐬𝐭 𝐝𝐞𝐜𝐢𝐥𝐞.    • 𝐈𝐏𝐎 𝐩𝐫𝐢𝐜𝐞 ≠ 𝐥𝐢𝐪𝐮𝐢𝐝𝐢𝐭𝐲 𝐯𝐚𝐥𝐮𝐞. By the 6-month lock-up - when pre-IPO investors can actually sell - 𝐭𝐡𝐞 𝐦𝐞𝐝𝐢𝐚𝐧 𝐬𝐭𝐨𝐜𝐤 𝐢𝐬 𝐚𝐥𝐫𝐞𝐚𝐝𝐲 𝐝𝐨𝐰𝐧 𝟕%, with only the top four deciles are positive.    • 𝐂𝐲𝐜𝐥𝐞𝐬 𝐜𝐚𝐧 𝐦𝐚𝐤𝐞 𝐨𝐫 𝐛𝐫𝐞𝐚𝐤 𝐫𝐞𝐭𝐮𝐫𝐧𝐬. The 2020 - 2022 wave made up 40% of IPOs - 𝐲𝐞𝐭 𝟓𝟓% 𝐟𝐞𝐥𝐥 𝐢𝐧𝐭𝐨 𝐭𝐡𝐞 𝐛𝐨𝐭𝐭𝐨𝐦 𝐭𝐡𝐫𝐞𝐞 𝐝𝐞𝐜𝐢𝐥𝐞𝐬, while just 4% cracked the top three.    The conclusion: 𝐭𝐡𝐞 𝐩𝐨𝐰𝐞𝐫 𝐥𝐚𝐰 𝐝𝐨𝐞𝐬𝐧’𝐭 𝐬𝐭𝐨𝐩 𝐚𝐭 𝐈𝐏𝐎. 𝐏𝐮𝐛𝐥𝐢𝐜 𝐦𝐚𝐫𝐤𝐞𝐭 𝐨𝐮𝐭𝐜𝐨𝐦𝐞𝐬 𝐟𝐨𝐫 𝐕𝐂-𝐛𝐚𝐜𝐤𝐞𝐝 𝐜𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 𝐚𝐫𝐞 𝐣𝐮𝐬𝐭 𝐚𝐬 𝐬𝐤𝐞𝐰𝐞𝐝 𝐚𝐬 𝐢𝐧 𝐩𝐫𝐢𝐯𝐚𝐭𝐞 𝐯𝐞𝐧𝐭𝐮𝐫𝐞 𝐩𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨𝐬. 𝐒𝐨, 𝐰𝐡𝐚𝐭 𝐚𝐫𝐞 𝐭𝐡𝐞 𝐊𝐞𝐲 𝐓𝐚𝐤𝐞𝐚𝐰𝐚𝐲𝐬? 𝟏. 𝐏𝐨𝐰𝐞𝐫 𝐥𝐚𝐰 𝐫𝐮𝐥𝐞𝐬. The skewed distribution of returns isn’t unique to VC - it persists in public markets, where a small fraction of IPOs drives nearly all value. 𝟐. 𝐄𝐚𝐫𝐥𝐲 𝐬𝐢𝐠𝐧𝐚𝐥𝐬 𝐦𝐚𝐭𝐭𝐞𝐫. Companies that reach the top decile at year 3 are often outperforming by 6 months or 1 year, while most laggards never recover, highlighting the importance of early post-IPO momentum. 𝟑. 𝐓𝐢𝐦𝐢𝐧𝐠 𝐚𝐧𝐝 𝐜𝐲𝐜𝐥𝐞𝐬 𝐦𝐚𝐭𝐭𝐞𝐫. Most top-decile IPOs went public ahead of the 2020 - 2021 bull run, while the majority of IPOs during those years now trade in the lower deciles, showing how market cycles shape outcomes. Signals in the Noise 🤓

The #IPO space in 2024 has been a fascinating mix of stellar debuts, consistent performers, and unexpected underperformers. At Motilal Oswal, our team has analyzed these trends in detail, and I thought of sharing some key highlights from our comprehensive report. -Of the 78 main-board IPOs, 54 (69%) are trading at a premium to their offer prices, with 11 delivering gains of over 100%. -Among the top 20 IPOs by issue size, 16 are trading above their offer prices. Leading the pack is Premier Energies, up 194%, followed by Bharti Hexacom (+155%), Waaree Energies (+106%), Bajaj Housing (+84%), and Swiggy (+50%) -On debut performance, Bajaj Housing gained 136%, Premier Energies (+87%), Waaree Energies (+55%), Brainbees Solutions (+46%), and Bharti Hexacom (+43%) -Only three IPOs in the top 20—ACME Solar (-12%), Hyundai Motor (-7%), and Sagility India (-2%)—debuted below their offer prices. Sector performance highlights: 70% of the sectors are trading above their listing day prices. -Top performers: Consumer Durables (+77%), Logistics (+57%), Capital Goods (+51%), Chemicals (+35%), and Metals (+32%) -Laggards: Oil & Gas (-29%), NBFCs (-17%), Hotels (-9%), Retail (-8%), and Private Banks (-6%) The IPO landscape continues to reflect a robust appetite for equities, with key sectors outperforming expectations. *This content is for informational purposes only and is not intended as financial advice, or recommendation of any sort #Ipo #Update #MotilalOswal #Research #Report

DSC Holdings' Nasdaq debut raises a more interesting question than why the stock plunged. The better question may be whether the market had already seen enough in the company's F-1 to justify a more cautious valuation. Rather than speculate about the first day's trading, it's more instructive to examine the factors sophisticated institutional investors would likely have evaluated before the IPO was priced. 1. Fundamentals. Revenue declined as management exited a lower-margin business to sharpen its focus on its core AI platform. Gross margins improved, supporting the strategy. But operating cash flow and free cash flow remained negative, raising the more important question: Can the streamlined business consistently convert its strategy into sustainable cash generation? 2. Valuation. Was the IPO priced for execution success before that success had been demonstrated? 3. Governance. A Cayman holding company, VIE structure, controlled-company status, and the practical challenges of enforcing certain shareholder rights across jurisdictions each add uncertainty. Together, they might justify a larger governance discount. 4. Market structure. A relatively small public float can amplify volatility and make it more difficult to build a stable institutional shareholder base. 5. Geopolitics. Some global investors may also have applied what could be described as a "China AI discount." At a time of strategic competition between the U.S. and China in artificial intelligence, geopolitical and regulatory uncertainty may offset part of the valuation premium AI companies might otherwise receive. None of these factors alone necessarily explains a first-day selloff. But institutional investors rarely reject an IPO because of a single risk factor. More often, they step back when multiple risks begin reinforcing one another. #DSC #IPO #CapitalMarkets #DueDiligence #CorporateGovernance #InvestorRelations

After 𝐞𝐱𝐩𝐨𝐬𝐢𝐧𝐠 𝐬𝐭𝐚𝐫𝐭-𝐮𝐩 𝐈𝐏𝐎𝐬 in my previous post, I compared "𝐋𝐢𝐬𝐭𝐢𝐧𝐠 𝐠𝐚𝐢𝐧𝐬" vs "𝐏𝐨𝐬𝐭-𝐈𝐏𝐎 𝐫𝐞𝐭𝐮𝐫𝐧𝐬" - - - What happened on listing day vs where they are today.  And the gap is wild. 𝗢𝘂𝘁 𝗼𝗳 𝟯𝟬 𝘀𝘁𝗮𝗿𝘁-𝘂𝗽 𝗜𝗣𝗢𝘀: - 26 delivered listing gains  - Average debut return: +33% 𝗦𝗼𝘂𝗻𝗱𝘀 𝗹𝗶𝗸𝗲 𝗲𝗮𝘀𝘆 𝗺𝗼𝗻𝗲𝘆, 𝗿𝗶𝗴𝗵𝘁? 𝗡𝗼𝘄 𝗹𝗼𝗼𝗸 𝗮𝘁 𝘄𝗵𝗮𝘁 𝗵𝗮𝗽𝗽𝗲𝗻𝗲𝗱 𝗮𝗳𝘁𝗲𝗿.  - Average post-IPO return: -11.3%  - Excluding top 5 winners: -38.1% 𝗧𝗵𝗮𝘁’𝘀 𝗮 𝗰𝗼𝗺𝗽𝗹𝗲𝘁𝗲 𝗿𝗲𝘃𝗲𝗿𝘀𝗮𝗹. This is not "wealth creation" but "wealth transfer" in disguise. Let me highlight, some of the classic “blink-and-miss” cases: • 𝗨𝗻𝗶𝗰𝗼𝗺𝗺𝗲𝗿𝗰𝗲: +117.6% on listing and -62.5% now  • 𝗜𝗱𝗲𝗮𝗳𝗼𝗿𝗴𝗲: +93.5% and -69.5%  • 𝗡𝘆𝗸𝗮𝗮: +79.4% and -87.8% The pattern is hard to ignore. IPO day rewards “hype”. But post-IPO rewards “performance”. And when hype fades away, you can check the performance. And most of these companies weren’t ready for that shift. At listing, the market priced in:  “Disruption”, “Scale”, “Future potential” A few quarters later, it asked for:  𝗥𝗲𝘃𝗲𝗻𝘂𝗲, 𝗠𝗮𝗿𝗴𝗶𝗻𝘀, 𝗘𝘅𝗲𝗰𝘂𝘁𝗶𝗼𝗻 And most of these didn’t have enough to back the price. 𝗦𝗶𝗺𝗽𝗹𝗲 𝘁𝗮𝗸𝗲𝗮𝘄𝗮𝘆: - Listing gains feel like success. - But they rarely tell you what the business is worth. If you’re applying for IPOs just for the pop, that’s a trade. If you’re holding after listing, make sure it’s actually an investment. Because the data is clear:  What goes up on Day 1, doesn’t usually stay there.  - - - ♻️ 𝐑𝐄𝐏𝐎𝐒𝐓 if you liked the analysis 🔔 𝐅𝐎𝐋𝐋𝐎𝐖 me (Akashdeep Grover) for data-driven deep dives on Indian stock market #ipo #startup #stock #finance #valuation #investing #listing #hype

The summer of mega-IPOs is here! With SpaceX potentially becoming the largest IPO in history, and OpenAI and Anthropic lining up behind it, IPOs are dominating the headlines 🔥 I looked at Professor Jay Ritter’s comprehensive IPO data going back to 1980, and the historical lessons are interesting 👇 One: IPOs are usually underpriced on day one From 1980–2025, the average first-day return was 19%. In other words, investors who get shares at the offer price often get a nice “pop.” But that also means companies leave a lot of money on the table. In 2025 alone, that totaled $13.1 billion, or about 33% of IPO proceeds. Two: The day-one pop is not the same as long-term performance This is the key point. IPOs have historically lagged the broader market over the following three years, especially if you buy after the first-day close. The hype is often front-loaded. Three: Quality matters The IPOs that do better over time tend to be larger, profitable, and reasonably valued. Smaller companies, unprofitable companies, and especially very expensive companies can have bigger first-day pops — but much worse long-term returns. Four: Valuation matters a lot (eevntually) Among IPOs with at least $100 million in sales, the most expensive companies — those above 40x sales — had huge first-day returns but then lost nearly 45% over the next three years, lagging the market by almost 59 percentage points 😬 Which brings us to SpaceX. The company is massive, with 2025 revenue of about $18.7 billion. But at a potential $1.7 trillion valuation, that’s roughly 91x sales. It is also unprofitable, with a $4.9 billion net loss in 2025 and another $4.27 billion loss in Q1 2026. You can make up your own mind whetehr this is a good trade, good investment, or not 😁 There’s also a broader market issue: supply. A wave of mega-IPOs means a lot of new stock hitting the market, and lock-up expirations could bring even more shares for sale later. That’s a shift from the buyback-driven equity shrinkage we’ve seen for much of the past two decades. Bottom line: IPOs can be exciting, and this summer could be historic. But be careful out there. More in my new blog 👇 https://lnkd.in/e59nhPS4