IPOs Are Back—But Retirees (and Most Investors) Should Probably Just Wave as They Pass By
After years of silence, IPOs are finally picking up again—but not with the same enthusiasm or quality. While Wall Street tries to hype up the comeback, most long-term investors—and especially retirees—should treat IPOs the same way they’d treat a “get rich quick” scheme on TikTok: with healthy skepticism and polite disinterest.
IPOs: Still Risky, Still Overhyped
Let’s start with what an Initial Public Offering (IPO) actually is. When a private company decides it wants to raise money by selling shares to the public, it "goes public" through an IPO. Sounds exciting, right? You get to own a slice of the next big thing before the world catches on.
Except… most of the time, the world has already caught on. You’re not the first one through the door. You’re the one paying full price at the gift shop while the insiders are selling you souvenirs they bought at wholesale prices years ago.
A Strong Market… So Why So Few IPOs?
This is where the contradiction gets interesting.
Markets have been strong—the Russell 1000 rose over 20% in both 2023 and 2024, and U.S. stocks have generally done well in five of the last six years. Under normal circumstances, that should have been a green light for IPO activity. High valuations? Investor optimism? Historically, those are prime IPO conditions.
But the chart you’ll see below tells a different story: IPO capital raised in 2022, 2023, and 2024 was way below the long-term average of $50 billion annually (excluding SPACs). In other words, we’ve had a healthy bull market, but IPO activity still hasn’t bounced back to match it.
Why the Drought?
Several factors have created a kind of IPO purgatory:
- Large companies are driving the gains. The Russell 1000 (large cap) has outpaced the Russell 2000 (small cap) by more than 2:1 in recent years. Since smaller companies typically dominate the IPO pipeline, the market isn’t as welcoming to new entrants as it looks on the surface.
- Regulation is heavier than ever. Post-2021 rule changes mean higher legal costs, more executive scrutiny, and more headaches for CFOs. For many founders, staying private is easier than enduring the joys of quarterly earnings calls and Sarbanes-Oxley compliance.
- Private capital has changed the game. In the old days, growing companies had to go public to raise big money. Now, private equity firms and private credit funds are awash in capital—and happy to invest hundreds of millions in later-stage rounds. Why go public when you can stay private, keep control, and avoid airing your financial laundry every quarter.
The Post-SPAC Hangover
Remember 2021, when every other headline was about a new SPAC (Special Purpose Acquisition Company)? The basic pitch was: give us money, we’ll go find a private company to merge with allowing them to avoid the whole IPO process, you’ll get a vote on whether you like the deal, if enough investors vote “yes” the deal is completed. That speculative boom brought a flood of immature, unprofitable companies to market—and many of them bombed. It also pulled forward a bunch of IPOs that otherwise would’ve happened more gradually, leaving a thinner pipeline in recent years.
The reason many of these SPACs cratered in value after merging was because of incentives. The operators of the SPAC (“promoters”) had only one goal which was to get a deal done at any valuation so they could be paid shares and cash for their services (then turn around and dump the shares as their cost was ~$0/share). It didn’t matter if the company was any good or worth what they paid for it; they weren’t the ones left holding the bag. Here’s a table showing how the 2019-2020 era of SPACs performed over 6- and 12-months post-merger... it’s not pretty:
The average (mean) returns in the first 12 months after merging was –35% and that was clearly influenced by a few big winners as the median return over 12 months was –65% meaning that half of the SPACs did better but half somehow did worse. Keep in mind this performance period is tracking 2020-2021 (a rolling 12 months after mergers that occurred between 1/1/2019-12/31/2020), the S&P 500 was up ~17% in 2020 and ~27% in 2021.
The 2025 "Rebound": More Sizzle Than Steak?
Yes, IPO volume is up this year—76% higher than the same time in 2024. But let’s not confuse volume with value. The average deal size is down to just $135 million, and nearly 30% of IPOs are SPACs—again...
Worse, the ones that do make it out of the gate aren’t doing well. Take Venture Global, one of 2025’s largest IPOs. It raised $1.75 billion… and promptly fell 60%. That’s like throwing a lavish wedding and ending the night in divorce court.
Why Retirees Should Stay Far, Far Away
Here’s the simple truth: IPOs are volatile, overhyped, and largely unnecessary for a sound retirement plan.
- They lack long-term data. Rule #1 investors like Warren Buffett avoid IPOs because they don’t offer enough history to evaluate durability or recession resistance. You wouldn’t buy a used car without a vehicle history report—why treat your retirement savings any differently?
- They're often overpriced. Hype creates inflated valuations, and retail investors are usually the last to the party. By the time you can buy shares, insiders are already preparing to sell—often right after the lock-up period, which typically leads to short-term price drops.
- They underperform. Studies show that 40% to 60% of IPOs deliver negative returns, even in strong markets. The ones that do succeed often do so years after the initial offering—meaning you probably could’ve bought in later, at a better price.
You’ll Probably Get a Better Deal… Later
Let’s revisit a few famous names:
- Rivian: Sky-high debut, followed by a massive drop. Investors are worried about a potential bankruptcy now.
- Lyft: IPO’d at $72, now worth about what a short ride from Lyft would cost.
- Airbnb: IPO’d at $68, rocketed to $144, later dropped under $90. That might not sound bad, right? But that $68 was for people assigned shares before markets opened... most retail investors got in after the market opened when ABNB was selling for $140+.
- CoreWeave: A recent AI standout—dipped below IPO price before a 100%+ run.
- WeWork: It’s THE case study of what happens when hype replaces due diligence. There’s even a documentary of the saga on Hulu.
So… What Should Investors Do?
If you’re nearing or in retirement, you should do the opposite of what IPO hype encourages:
- Be patient.
- Avoid speculation.
- Favor quality, history, and sustainability.
Markets are designed for price discovery and capital raising—not for feeding our get-rich-quick urges. IPOs have a role in the capital markets, but that doesn’t mean they belong in your portfolio.
As Warren Buffett says: “Price is what you pay. Value is what you get.” IPOs often offer a very high price—and very uncertain value.
Final Thought
IPOs may be back, but that doesn’t mean they deserve a place in your portfolio. Let others chase the fast money. You don’t need to catch lightning in a bottle to retire well. Next time someone pitches you the “next big thing,” smile, say “no, thank you” … and go back to checking your beautifully boring portfolio that’s doing exactly what it’s supposed to do.