The IPO market could finally be getting its moment in 2026. A number of high-profile private companies are expected to pursue public listings, giving investors one of the most anticipated IPO calendars in years.
SpaceX has set its initial public offering price at $135 a share, targeting a valuation of about $1.77 trillion ahead of its expected June 12 debut, CNBC reported.
OpenAI and Anthropic are expected to follow with their own massive offerings. Interest among retail investors is unsurprising, given that access to a company such as SpaceX before an IPO is widely perceived as a potentially once-in-a-generation opportunity.
Morgan Stanley, which is underwriting several of these deals, recently published a guide on its E*TRADE platform that sharply pushes back on that excitement.
Decades of IPO data point to long-run underperformance for new listings
Morgan Stanley warns that newly public shares often experience sharp price swings as buyers and sellers work to establish a fair value.
The most authoritative dataset on IPO performance comes from Jay R. Ritter, the University of Florida finance professor known across Wall Street as “Mr. IPO.”
His foundational 1991 paper, ‘The Long-Run Performance of Initial Public Offerings,’ which examined 1,526 IPOs from 1975 to 1984, has been cited more than 60,000 times.
Ritter also maintains a separate, continuously updated dataset of U.S. IPOs from 1980 to 2025 through his University of Florida IPO data hub.
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From 1980 through 2025, IPO stocks popped by an average of 19% from their offering price on the first day of trading, Ritter told CNBC.
The long-run performance picture for IPOs is even more sobering than the first-day numbers suggest. The foundational 1991 research established that IPO stocks have underperformed compared to established firms over three- and five-year horizons.
Meta Platforms fell more than 50% from its $38 offering price before eventually recovering, Baird’s wealth management team noted, according to Motley Fool.
Uber hit an all-time low on the date its lockup expired, down 40% from the IPO price, CNBC reported.
Rivian also dropped about 21% in a single session after Ford disclosed plans to sell its stake at the 180-day mark, according to a different CNBC article.
The ride down hits hard regardless of where the stock finishes
Many recent IPOs have experienced steep declines during their first year, with insider selling and lockup expirations often adding to the pressure, even when the shares eventually bounced back, The Motley Fool reported.
IPO shares often move sharply in the first days of trading as buyers and sellers set a market price, sometimes falling below the offering price, the Morgan Stanley guide noted.
“IPOs are typically younger, riskier companies,” said Ross Mayfield, an investment strategy analyst at Baird, during a recent discussion on newly public stocks.
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Retail investors face a structural disadvantage from the opening bell
Morgan Stanley’s guide outlines two primary routes for buying newly public shares: requesting an allocation at the offering price or purchasing on the open market afterward.
Allocation requests do not guarantee that investors will receive shares, and popular offerings can see demand far outstrip supply, the firm explained.
Any pop in the stock price during the first hours of trading therefore benefits institutional holders, not the retail investors buying at the higher aftermarket price.
Brokerages that distribute IPO shares, including E-Trade, also enforce anti-flipping policies that restrict early resales and may reduce future allocation eligibility for quick sellers, the firm noted.
Lockup expirations can trigger a second wave of selling pressure
Morgan Stanley’s guide flags another risk that first-time IPO investors often overlook: insiders are typically barred from selling shares for about 180 days.
Watch out for the expiration of ‘lock-up’ periods. The timetable windows, typically 180 days post-IPO, during which insiders and early investors are restricted from selling. When that window opens, a flood of shares can hit the market and drive the price down sharply
When those lockup windows expire, a large block of previously restricted shares can flood the open market at once, potentially pushing the stock price lower.
The firm recommended reviewing the prospectus for specific lockup dates, because those events can move the stock price months after the debut, E*TRADE noted.
A hot IPO pipeline does not guarantee an opportunity for individual investors
The 2025 IPO market produced about $44 billion in total proceeds, a stronger rebound than many analysts anticipated, which also exceeded historical averages, Deloitte reported.
Momentum has carried into 2026, with technology, defense, and financial services listings driving new public offerings across multiple exchanges.
“We’re seeing IPO activity build across many sectors,” Eddie Molloy, Morgan Stanley’s global co-head of equity capital markets, explained.
The firm identified artificial intelligence infrastructure and aerospace and defense as the two dominant forces shaping the current listing pipeline, Morgan Stanley reported.
The current pipeline includes genuinely transformative companies, but the historical record shows that first-year drawdowns and negative median returns have been the norm rather than the exception.
Morgan Stanley’s guide recommended that investors review the prospectus closely before any IPO investment, focusing on risk factor disclosures, revenue sources, competitive dynamics, and how the company plans to use IPO proceeds.
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