The IPO boom is back, with SpaceX and OpenAI on investors’ 2026 wish lists. But be careful what you buy

IPO market now heating up again. While 2026 will almost certainly not match 1999, when 476 companies went public, investors should have more options than four years ago, when just 38 companies went public. Potential debuts this year include giants space exploration technologies corp. and OpenAI.

“We’re going to see companies go public that will define the U.S. technology and economic landscape over the next decade,” said Matt Kennedy, senior strategist at Renaissance Capital.

All of this is attractive to investors looking to get into the next market early Microsoft or Google. But, as history shows, there’s a lot to hesitate about for those looking to grab a first-day share of the offering.

More IPOs, more failures

Jay Ritter is a soft-spoken professor emeritus at the University of Florida who earned the nickname “Mr. IPO” for his exhaustive research on initial public offerings. His data shows that in some years, new issues continue to outperform the overall market, but in other years, the opposite is true, especially during big years for initial public offerings.

While Nvidia stock proved to be a winner, that was not the case across all IPO categories in 1999. In fact, the three-year return for newly public companies that year was -48%. This number is particularly sobering given that Ritter’s metric is measured based on the first-day closing price (which is almost always higher than the official offering price) and does not include unconventional IPOs such as reverse mergers.

For those who try to dismiss this as ancient history, after all many members of the 1999 IPO class were dotcom bubble collapse— 2021 is another cautionary tale. A massive 311 companies went public that year – the most in 20 years – but their three-year returns totaled -49%. The reasons for this are not particularly surprising.

“When every initial public offering is in full swing, you see deals coming together in a rush,” Kennedy said, noting that smaller, unprofitable companies that wouldn’t normally make the cut are also able to complete IPOs in such an environment. He added that investors face further challenges during the IPO bull market, as even strong companies tend to go public at valuations that are difficult to justify, increasing the likelihood of future slumps.

As a result, IPO booms provide investors with more opportunities, but also more opportunities for mistakes. At the same time, companies that go public in bad years are more likely to be built to last.

The path to market has also changed over the years. Companies that debuted in the 1980s and 1990s were generally younger than today’s IPO entrants, but were also more likely to be profitable, Ritter said. But surprisingly, Ritter said profitability at the time of the IPO was not a significant predictor of future success. Company sales are a better indicator, he said, and companies with annual revenue of $100 million or more are more likely to do well over the long term than those with annual revenue of $100 million or less.

When to buy and what to expect

Any investor trying to buy a newly listed stock has likely encountered a familiar frustration: Even if they seek to buy a stock as soon as it becomes available, the price they see from their brokerage firm is higher than the official listing price.

This happens because the banks that underwrite the shares provide the listing price to large clients, causing retail investors to rush to buy the shares on the open market. Those who want a better price can get in earlier – through a private sale or during a company’s pre-IPO “roadshow” – but that’s easier said than done.

Glen Anderson of Rainmaker Securities, which brokers private equity deals, said it’s possible to own stock in companies like SpaceX or OpenAI, but it typically requires an investment of $250,000 or more.

But for the vast majority of investors who buy stocks on the open market, timing can still come into play. Renaissance’s Kennedy said there’s no benefit in buying a stock as soon as it hits the market, adding that it might even be a good idea to buy it at the end of the day or the day after the IPO.

To truly understand a stock’s value, you often have to wait quite a while for the dust to settle. Ritter doesn’t think the first earnings report from a newly public company is particularly helpful, noting that analysts and corporate executives are heavily invested in delivering results that meet expectations, meaning companies will do whatever is necessary to achieve that goal. He said the company’s true investment potential will become clearer in six months, when insiders are allowed to sell their shares, after which the share price will reflect more of the company’s fundamentals rather than IPO hype.

Still, the next Nvidia is likely to be on this year’s IPO list, and for those who want to buy it on the day it goes public, the best approach is still good old-fashioned research, Anderson said.

“You can hit the buy button on every new stock when it opens,” he said. “Or you can do your homework and see what the stock is really worth relative to its comparisons and valuations, and then wait for the price you want. Otherwise, you’re just rolling the dice.”

This article appeared in the February/March 2026 issue wealth The headline read, “The IPO boom era is back — but be careful what you buy.”