Introduction
Picture this: It's 9:30 AM on a Tuesday morning. Your neighbor tells you over coffee that he dropped $5,000 into an IPO last week and it's now worth $12,000. Your Twitter feed is exploding with screenshots of people posting gains from Circle or CoreWeave IPOs—some hitting 200% returns in a single day. Your investment club chat is buzzing: "This is the easiest money you'll ever make!"
Your palms start sweating. Are you missing out? Is there a guaranteed path to wealth through IPOs that everyone knows except you?
Let me give you the unfiltered truth: Getting rich from IPOs is way harder than the hype suggests, and for most retail investors, it's not just difficult—it's outright risky.
The 2025 IPO Boom: Why Everyone's Suddenly Excited
First, let's understand why IPOs are dominating conversations right now. After years of a sluggish market, 2025 has been a comeback story. The US IPO market saw 102 deals in the first half of 2025 alone—the best first half since 2021. More importantly, these new stocks are performing impressively: IPOs are up 27.5% on average in their first day of trading, compared to the S&P 500's modest 3.5% year-to-date gains.
Some standout examples? Circle, a cryptocurrency payments platform, jumped 168% on its first day. CoreWeave, an AI infrastructure company, surged over 300% after going public. If you had gotten in on these, you'd be looking at life-changing returns.
But here's the thing: These are outliers. They're the lottery winners making headlines. Nobody talks about the dozens of IPOs that flatlined or went down.
The Real Math Nobody Tells You
Here's where the pretty story falls apart. Yes, the headline numbers look amazing. But if you dive deeper into the data, you'll see something fascinating: The incredible gains in 2025 were driven primarily by just two companies—Circle and CoreWeave. If you remove these two outliers from the entire IPO portfolio for the first half of 2025, the average return drops from 75.9% to 43.5%. Remove CoreWeave too, and it's only 10%.
Think about that. You'd have to correctly pick one of the few superstars out of dozens of IPOs. That's not investing—that's gambling.
Now, let's talk about the small players. If you invested in IPOs raising under $100 million, you would have gotten crushed in 2024 with average losses of 28.5%. Small IPOs are risky. Period.
The Insider Secret: Who Really Gets Rich From IPOs
Here's what Wall Street doesn't want you to know: The real wealth from IPOs isn't made by retail investors like you and me buying shares on day one. It's made by the people who got in before the IPO.
When a company goes public, there are several groups with insider access:
Venture capitalists and early investors: These people bought shares when the company was worth millions, and now they're selling when it's worth billions. That's where the real money is made—before you ever hear about the IPO.
Company founders and executives: They hold massive amounts of stock and options. When Circle went public, executives held hundreds of thousands of shares. Their returns are absolutely insane compared to what a retail investor can achieve.
Big institutional investors: They get preferential pricing, better allocation of shares, and early access to company information that retail investors never get.
When you buy shares on the first day of trading, you're buying at the peak of the hype cycle. Everyone and their dog already knows about the company. The momentum has already started. You're buying into euphoria.
The Lock-In Trap: When the Real Selling Begins
Here's a trap that catches thousands of retail investors every year: the lock-in period.
When a company goes public, insiders—founders, employees, venture investors—can't immediately sell their shares. There's usually a 180-day lock-in period (six months). During this time, retail investors are holding their shares, often watching the price stagnate or decline, wondering when things will improve.
Then, one day, the lock-in expires. Suddenly, there's a tidal wave of insider shares flooding the market. Big investors who want to take profits start dumping. Founders who were hyped in TV interviews start quietly liquidating. The supply of shares dramatically increases while demand stays flat or drops.
What happens next? The stock tanks.
You wanted to hold for a few months thinking it would recover, but instead, you're staring at a 40% loss because the people who actually believed in the company just cashed out.
The Access Game: Not Everyone's Playing by the Same Rules
Here's something that really grinds my gears: The allocation game is rigged from the start.
In a hot IPO that's massively oversubscribed, the chances of you getting the number of shares you applied for are tiny. It's basically a lottery. Meanwhile, hedge funds and institutions? They get their full allocation. The system is designed to give institutions first pick, and retail investors get whatever's left over.
But it gets worse. When an IPO is so popular that demand exceeds supply by 10:1 or more, brokerages have to randomly select which retail investors get shares at all. You might not even be in the game.
And even if you do get shares? By the time you can actually sell them on the open market, the price has often already moved significantly. You're not trading at fair value—you're trading on momentum, rumor, and emotion. The professionals already did their profit-taking before you could even settle your trade.
The 3-Year Hangover: When Reality Sets In
Let's talk about what happens after the initial excitement dies down.
Studies show that IPO stocks underperform the broader market by about 20% over a three-year period. Why? Because the story changes. On day one, it's "the next Amazon" or "disrupting an entire industry." Six months later, it's just another company trying to hit its quarterly targets, dealing with competition, dealing with inflation, dealing with the same problems as everyone else.
Investors realize the company was priced for perfection, and perfection is rare. The premium valuation people paid for growth and innovation starts to compress. Meanwhile, boring, profitable companies that trade at reasonable multiples of earnings quietly outperform the "hot" IPO.
Tech stocks showed this pattern clearly in 2025. While technology IPOs were up 246% in the first half of the year, energy IPOs were down 32.5%, and materials were down 20.7%. By sector, the energy sector didn't just underperform—it got demolished.
This is why disciplined traders don’t view IPOs as long-term holdings. They treat them as short term US stocks trading opportunities, with clear entry levels, defined risk, and planned exits—rather than emotional bets on narratives.
Can You Still Make Money?
Okay, so it's not all doom and gloom. Some IPOs genuinely do well. Some investors do make money. So what's the difference between those who win and those who lose?
First, they do actual research. They don't just see a ticker on CNBC and buy. They read the company's prospectus (the S-1 filing), which is basically a detailed report on what the company does, its financials, and its risks. They look at revenue trends. They check if the company is actually making profits or just burning through cash. They look at management quality and track records.
Most retail investors skip this step entirely. And they pay the price.
Second, they have a strategy and stick to it. Are you trying to catch a quick pop on listing day? Then set a profit target—maybe 10-15%—and exit if you hit it. Don't get greedy. Or are you investing for long-term growth? Then only buy quality companies with solid fundamentals and be prepared to hold for years, through ups and downs.
The worst thing you can do is have no strategy. You buy on impulse, watch it go down, panic, convince yourself "it will bounce back," hold too long, and finally capitulate on the way down. That's how most people lose money.
Third, they manage risk ruthlessly. This is the hardest part for most people emotionally. When you buy a stock for $50 and it drops to $40, your brain screams, "Hold! It'll recover!" But the pros cut losses immediately. They accept a small loss and move on to the next opportunity. They know that capital preservation is more important than waiting for a stock to bounce back from depths of despair.
The Winners Are Rare, and They're Usually Lucky
In 2025, about 160 IPOs came to market in the US. Of those, how many turned into home runs? Maybe 15-20. The rest? Average, disappointing, or losses.
The people who made serious money from IPOs in 2025 are mostly one of three types:
Venture investors who got in early and cashed out at the IPO or shortly after.
Company employees who had stock options and exercised them years before the IPO when the strike price was pennies.
Lucky short-term traders who happened to pick Circle or CoreWeave and got out at the peak. But luck isn't a strategy—it's just luck.
The average retail investor who buys on excitement and hope? They're fighting against the odds.
The Bottom Line: Separating Myth From Reality
Can you get rich from IPOs? Technically, yes. But the odds are far worse than what social media wants you to believe.
The US IPO market in 2025 is up 15% on average—which sounds great until you realize it took individual investors tremendous skill and luck to capture that. The market is filled with people who got decimated by poor picks.
Companies going public are often pricing their shares at peak valuations so insiders can exit at maximum profit. Institutional investors get better pricing and allocation. Retail investors get whatever's left. Lock-in expirations create sudden sell-offs. And most IPO stocks don't beat the market long-term.
If you do decide to play the IPO game, go in with eyes wide open. Do real research. Have a plan. Set profit targets and stop losses. Don't invest money you can't afford to lose. And most importantly, understand that the people celebrating on social media are the ones who won the lottery, not following a reliable system.
Real consistency doesn’t come from chasing IPO hype. It comes from discipline, risk management, and applying proven swing trading strategies for US stocks—where probabilities, not promises, drive results.
Now you know too.
