The IPO Surge: Should You Join the Rush?

The market is seeing a lot of new companies going public, and it's easy to get excited. But before you dive in, think about this: many of these stocks are in risky areas like AI and cryptocurrency. So far this year, there have been 161 IPOs in the U. S. , which is already more than last year's total of 150. The third quarter alone saw 64 IPOs, raising $15. 3 billion—the biggest quarter for new issuances since 2021. Two big IPOs this year are CoreWeave and Circle Internet Group. CoreWeave, a cloud platform for AI computing, started at $40 per share in March and is now at $137, giving it a market cap of $71 billion. Circle Internet Group, a bitcoin trading platform, went public at $31 in June and is now trading at $133, with a market value of $30 billion. Both companies are still not making a profit, which adds to the risk. IPOs have always been risky because these companies are often new and not well-established. Historically, they've been a way for companies to raise money to grow. But today, IPOs also serve as a way for early investors to cash out and for employees with stock compensation to see the value of their shares. The excitement around IPOs can be intense, with investors hoping for a big jump on the first day of trading. So far in 2025, the average first-day return for IPOs over $100 million has been 27%, up from 16% in 2024. However, this excitement comes with risks. Experts suggest waiting a few months after an IPO to see how the company performs before investing. If you're thinking about investing in IPOs, it's wise to look at more established companies—those with at least $100 million in revenue. These companies tend to do better in the long run. It's also important to consider valuation measures, like price-to-sales ratios, especially for companies that aren't yet profitable. Not all IPOs are in trendy sectors. Venture Global, an energy company, went public to raise money for its plans to produce and sell liquefied natural gas. Despite its high debt, the stock has dropped since its IPO, but some analysts see potential. Smithfield Foods, a pork producer, also went public this year after being taken private in 2013. Analysts expect steady earnings growth, and most recommend buying the stock. If you're considering investing in IPOs, it's best to limit your investment to what you can afford to lose. You can also diversify by choosing an exchange-traded fund (ETF) that focuses on IPOs. However, be prepared for a bumpy ride, as these funds can be volatile.