What these mega IPOs mean for your portfolio

Twenty years ago, a company went public when it needed money to grow.

The IPO was the mechanism. Small company. Big ambitions. Not enough private capital to get there. Going public meant raising cash from thousands of investors so the business could scale. You got in early. You shared in the growth.

That model seems to be going away.

Companies used to go public at $50 to $100 million. A real business with real potential, still early enough that public investors could share in what came next. The IPO was where ordinary investors got access to the beginning of something.

That era ended quietly.

Private capital got so large, and stayed so patient, that the biggest companies today raise billions before anyone outside a small circle of insiders ever touches it. SpaceX has been compounding for over 20 years in private hands. OpenAI has been valued in the hundreds of billions on private markets for years.

By the time these companies go public, the compounding is done. The IPO is not an entry point. It is an exit ramp, for the people who were already in.

The average U.S. IPO in 2025 raised around $220 million. That is the typical deal — a real business going public, raising capital, accessing markets.

Now look at what is coming.

SpaceX is targeting a valuation somewhere between $1.5 trillion and higher. OpenAI is in the $1 trillion range. Anthropic is being discussed at $300 to $900 billion. Databricks may go public at $134 billion.

These are not small companies raising growth capital. They are fully formed enterprises that have already completed most of their growth trajectory in private markets, with private investors, before you ever had the opportunity to participate.

The public investor is not getting in early. They are buying the liquidity event for the people who got in early. That is a fundamentally different transaction.

Two things tend to happen with mega IPOs and retail investors.

First, the first-day pop benefits the people who were already in — not the people buying at the open. Over 45 years of data, IPOs have generated an average first-day return of 19%. That gain goes to institutional investors who receive shares at the offering price. If you are buying when the stock starts trading, you are already behind them. Research tracking more than 9,000 U.S. IPOs since 1980 found that buying at the first-day close and holding for three years typically trails the broader market by roughly 20 percentage points. The median IPO loses about a quarter of its value over that window.

Second, the names that generated the most excitement have a consistent track record of trading below their opening-day price for months or longer. Facebook fell to half its IPO price within four months and took 16 months just to return to where it started. Lyft was down more than 30 percent from its offering price within nine months. Snap fell below its IPO price within four months and was down 80 percent from its opening-day high within two years. Uber opened below its IPO price on day one.

These are not obscure companies. They are some of the most anticipated IPOs of the past decade. And in each case, the people buying at peak excitement absorbed the worst of it.

That is a pattern worth understanding before the noise gets loud again.

If you own a broad market index fund, you will likely own many of these companies eventually. They will be added to the index after they are public. You will capture the return that comes after the initial hype, which is often the durable part of the story.

You do not have to chase the IPO to participate in what these companies build.

The more interesting question for you is not whether to buy on day one. It is whether your plan is built around your actual goals, or around FOMO about whatever is making headlines.

That is always the question. The headlines just change.

This is educational and is not a recommendation to buy or sell any security. Past performance of prior IPOs does not guarantee future results. IPO investing carries significant risks including lock-up expirations, valuation uncertainty, and price volatility. Discuss your specific situation with a qualified advisor.