It’s time for the post-Labor Day IPO wave—historically a favorable window—and companies are not sitting it out despite the ongoing economic and political uncertainties.
A handful of companies, including “buy now, pay later” company Klarna, crypto exchange Gemini, and transit tech company Via, reprised or kicked off their IPO roadshows this week. Experts expect many of the same trends seen in recent months: large “IPO pops,” lower IPO pricing than prior sky-high private valuations, and enthusiasm for AI and crypto.
“Most of these companies had been on file for a while; they were waiting for what has been traditionally a good period for IPOs,” Lise Buyer, co-founder of IPO adviser Class V Group, told PitchBook News. Institutional investors usually hope for a strong Q4 to boost their full-year portfolio performance.
But she cautioned what has been true in the past can no longer be taken for granted.
Massive price jumps on the first day of trading have become a common feature of recent IPOs. Of the 56 IPOs between January and August this year, “the average first-day return has been 40.5% on an equally weighted basis, and 45% on a proceeds-weighted basis,” according to data compiled by Jay R. Ritter, a business professor at the University of Florida. Since 1980, only the dotcom bubble and the recent pandemic have recorded higher averages.
And that hasn’t historically panned out well for investors. From 1980 to 2023, only 45 companies with inflation-adjusted trailing 12-month sales of at least $100 million (in 2025 dollar terms) held IPOs, and a price-to-sales ratio of 40 or more at the first closing market price, according to Ritter. Investors who bought at that first-day closing price, on average, lost 49.5% over the following three years.
Since 2024, there have been five IPOs with those same characteristics: Astera Labs, Newsmax, Circle, Figma, and Firefly Aerospace. Of course, some have performed well, so the newcomers are not guaranteed a bad fate, he noted.
But playing the long game and erring on the side of caution amid ongoing uncertainty also explains the recent trend of massive IPO pops, Buyer said.
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While some companies—especially those in AI—are optimizing to raise as much capital from an offering as possible, others are pricing their IPOs more cautiously and setting the stage for big first-day price jumps.
“There’s incentive to price conservatively because a bad market reaction has long-term ramifications,” Buyer said. “People are happy when the price goes up, and sad when it goes down... It’s a real [employee and early-investor] morale crusher.”
In other words, these investors are trading some proceeds they might have been able to raise in exchange for a more likely stock price increase, at least on that first trading day.
With that said, Ritter surmised that if these large IPO pops continue for venture-backed companies, further fueling complaints that they “left money on the table,” we could see a renewed interest in direct listings.
What to watch as we head into this fall wave: macroeconomic forces, according to Buyer. While Fed chair Jay Powell’s recent speech, in which he hinted at possible interest rate cuts in the near future, was encouraging to companies planning to go public soon, “things change on a dime,” she warned.
Featured image by Drew Sanders/PitchBook News
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