U.S. IPO Buzz Returns, But Risks Remain

The U.S. IPO market started to heat up again in the first half of 2025. Several newly listed companies had big first-day gains, grabbing investors' attention.

Hot IPOs are booming, driving strong marketbuzz

In early June, drone maker  $AIRO Group Holdings(AIRO)$   skyrocketed 140% on its first day of trading on the NYSE. Before that, stablecoin issuer $Circle Internet Corp.(CRCL)$   jumped nearly 170% on its debut, making it one of the most high-profile crypto IPOs. In March, conservative media company Newsmax experienced a massive 750% surge on its IPO day.

Besides the big-name IPOs, $CoreWeave, Inc.(CRWV)$  , a cloud service company supported by Nvidia, has jumped nearly 240% just three months after going public.Thisshows strong interest in AI-related companies. Analysts say many recent IPOs are priced lower and offer fewer shares to attract money quickly. A top executive at Rainmaker Securities mentioned that these new stocks are often priced cheaper than similar companies, which makes them attractive to investors in the short term.

So far in 2024, three U.S.-listed companies that raised over $50 million have seen their stock prices double on day one — the highest number since the 2021 IPO boom, when standout names like Airbnb and Snowflake also delivered triple-digit gains on debut.

This latest wave of IPO enthusiasm is no accident. On the one hand, companies are deliberately downsizing offerings and pricing deals attractively to capitalize on favorable market windows. On the other, easing market volatility and growing expectations for a Fed policy shift have helped restore investor confidence in IPOs. Airo, for example, went public just as President Trump signed an executive order to boost the domestic drone industry, and geopolitical tensions added to its perceived strategic value.

Meanwhile, crypto-related IPO buzz is also building. Circle's explosive debut lit up the market and spurred interest from peers — including Gemini, BitGo, and Kraken — all rumored to be prepping for theirownIPOs. With Congress pushing on stablecoin regulation, a clearer regulatory outlook could open the door for more crypto firms to tap the public markets.

History shows that first-day surges rarely predict long-term performance

However, experience tells us that a strong IPO debut doesn't necessarily translate into long-term gains. Research by Jay Ritter, a finance professor at the University of Florida, shows that since 1980, nearly 90% of U.S. IPOs that doubled on their first day lost money for investors over a three-year holding period, with an average drawdown of 46%.

Jay Ritter points out that these big first-day jumps often come from companies that are not yet profitable, have unclear valuations, and are heavily driven by retail investor enthusiasm — making them vulnerable to swings in market sentiment. A classic example is Vroom, which soared in 2020 but eventually filed for bankruptcy due to poor operations.

This trend is especially evident during overheated markets like the 1999–2000 dot-com bubble when more than 100 companies doubled on their first day, yet most ended up delisted or marginalized. History shows that these IPO pop days reflect market sentiment and liquidity conditions more than sustainable company value.

Even strong fundamental names like $Airbnb, Inc.(ABNB)$   and $Snowflake(SNOW)$   have struggled to maintain their IPO-day valuation premiums, with both currently trading below their initial closing prices. Only a rare few — like Chipotle — have turned their first-day pop into long-term outperformance.

It's worth noting that some recent high-flying IPOs are already showing signs of cooling off: Newsmax's stock is now only about 24% above its offering price, while digital health company $Omada Health (OMDA.US)$ and ad tech firm $MNTN Inc (MNTN.US)$ have either fallen below their IPO prices or seen their gains sharply shrink. These swings remind investors that while short-term market enthusiasm can be intense, fundamentals determine whether a company weathers market cycles.

The summer months usually bring a lull in IPO activity. Still, some analysts believe the strong debuts of Airo and Circle could encourage other unicorns who had been holding back to accelerate their plans. Fintech player Chime and aerospace firm Voyager Technologies are expected to hit the market around mid-June, potentially marking the next key test of the IPO climate.

The IPO boom shows signs of revival, but it feels more like a short-term chase for fresh opportunities than a fundamental re-rating of valuations. Against the backdrop of escalating geopolitical tensions, a looming U.S. election, and still-uncertain monetary policy, investors should be cautious about short-term bubbles and prepared for the typical "pop and fade" pattern in the capital markets.

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