IPO Stock Performance Analysis

What if I told you that 𝐚𝐧𝐲𝐨𝐧𝐞 could be a venture investor - even in the public markets? Venture capital rests on one of the most important ideas in investing: 𝐭𝐡𝐞 𝐩𝐨𝐰𝐞𝐫 𝐥𝐚𝐰. A small handful of companies generate the vast majority of returns, while most deliver little to no upside. That’s why venture outcomes are so widely dispersed - and why aiming for “average” in VC rarely compensates for the risk or illiquidity. What’s less well understood is that this exact same phenomenon shows up in the 𝐩𝐮𝐛𝐥𝐢𝐜 𝐦𝐚𝐫𝐤𝐞𝐭𝐬 once VC-backed companies IPO. In fact, the pattern is even more glaring... I analyzed 𝟒𝟏𝟒 𝐍𝐨𝐫𝐭𝐡 𝐀𝐦𝐞𝐫𝐢𝐜𝐚𝐧 𝐕𝐂-𝐛𝐚𝐜𝐤𝐞𝐝 𝐈𝐏𝐎𝐬 𝐟𝐫𝐨𝐦 𝟐𝟎𝟏𝟎 𝐭𝐨 𝟐𝟎𝟐𝟐. I then ranked the companies by their year-3 post-IPO returns into deciles, and tracked how each year-3 decile performed at year-2, year-1, 6 months, and 1 day after IPO. The results were eye-opening: • 𝐓𝐡𝐫𝐞𝐞 𝐲𝐞𝐚𝐫𝐬 𝐩𝐨𝐬𝐭-𝐈𝐏𝐎, 𝟓𝟎% 𝐨𝐟 𝐜𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 𝐭𝐫𝐚𝐝𝐞𝐝 𝐛𝐞𝐥𝐨𝐰 𝐡𝐚𝐥𝐟 𝐭𝐡𝐞𝐢𝐫 𝐈𝐏𝐎 𝐯𝐚𝐥𝐮𝐞. Many of the private-market “power-law winners” failed to sustain their outperformance in the public markets.    • 𝐎𝐧𝐥𝐲 𝐭𝐡𝐞 𝐭𝐨𝐩 𝐝𝐞𝐜𝐢𝐥𝐞 𝐭𝐫𝐮𝐥𝐲 𝐦𝐚𝐭𝐭𝐞𝐫𝐬. Three years in, only the top three deciles delivered positive returns, with the top decile soaring +𝟒𝟎𝟎% - 𝐧𝐞𝐚𝐫𝐥𝐲 𝟒× 𝐭𝐡𝐞 𝐧𝐞𝐱𝐭-𝐡𝐢𝐠𝐡𝐞𝐬𝐭 𝐝𝐞𝐜𝐢𝐥𝐞.    • 𝐈𝐏𝐎 𝐩𝐫𝐢𝐜𝐞 ≠ 𝐥𝐢𝐪𝐮𝐢𝐝𝐢𝐭𝐲 𝐯𝐚𝐥𝐮𝐞. By the 6-month lock-up - when pre-IPO investors can actually sell - 𝐭𝐡𝐞 𝐦𝐞𝐝𝐢𝐚𝐧 𝐬𝐭𝐨𝐜𝐤 𝐢𝐬 𝐚𝐥𝐫𝐞𝐚𝐝𝐲 𝐝𝐨𝐰𝐧 𝟕%, with only the top four deciles are positive.    • 𝐂𝐲𝐜𝐥𝐞𝐬 𝐜𝐚𝐧 𝐦𝐚𝐤𝐞 𝐨𝐫 𝐛𝐫𝐞𝐚𝐤 𝐫𝐞𝐭𝐮𝐫𝐧𝐬. The 2020 - 2022 wave made up 40% of IPOs - 𝐲𝐞𝐭 𝟓𝟓% 𝐟𝐞𝐥𝐥 𝐢𝐧𝐭𝐨 𝐭𝐡𝐞 𝐛𝐨𝐭𝐭𝐨𝐦 𝐭𝐡𝐫𝐞𝐞 𝐝𝐞𝐜𝐢𝐥𝐞𝐬, while just 4% cracked the top three.    The conclusion: 𝐭𝐡𝐞 𝐩𝐨𝐰𝐞𝐫 𝐥𝐚𝐰 𝐝𝐨𝐞𝐬𝐧’𝐭 𝐬𝐭𝐨𝐩 𝐚𝐭 𝐈𝐏𝐎. 𝐏𝐮𝐛𝐥𝐢𝐜 𝐦𝐚𝐫𝐤𝐞𝐭 𝐨𝐮𝐭𝐜𝐨𝐦𝐞𝐬 𝐟𝐨𝐫 𝐕𝐂-𝐛𝐚𝐜𝐤𝐞𝐝 𝐜𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 𝐚𝐫𝐞 𝐣𝐮𝐬𝐭 𝐚𝐬 𝐬𝐤𝐞𝐰𝐞𝐝 𝐚𝐬 𝐢𝐧 𝐩𝐫𝐢𝐯𝐚𝐭𝐞 𝐯𝐞𝐧𝐭𝐮𝐫𝐞 𝐩𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨𝐬. 𝐒𝐨, 𝐰𝐡𝐚𝐭 𝐚𝐫𝐞 𝐭𝐡𝐞 𝐊𝐞𝐲 𝐓𝐚𝐤𝐞𝐚𝐰𝐚𝐲𝐬? 𝟏. 𝐏𝐨𝐰𝐞𝐫 𝐥𝐚𝐰 𝐫𝐮𝐥𝐞𝐬. The skewed distribution of returns isn’t unique to VC - it persists in public markets, where a small fraction of IPOs drives nearly all value. 𝟐. 𝐄𝐚𝐫𝐥𝐲 𝐬𝐢𝐠𝐧𝐚𝐥𝐬 𝐦𝐚𝐭𝐭𝐞𝐫. Companies that reach the top decile at year 3 are often outperforming by 6 months or 1 year, while most laggards never recover, highlighting the importance of early post-IPO momentum. 𝟑. 𝐓𝐢𝐦𝐢𝐧𝐠 𝐚𝐧𝐝 𝐜𝐲𝐜𝐥𝐞𝐬 𝐦𝐚𝐭𝐭𝐞𝐫. Most top-decile IPOs went public ahead of the 2020 - 2021 bull run, while the majority of IPOs during those years now trade in the lower deciles, showing how market cycles shape outcomes. Signals in the Noise 🤓

The #IPO space in 2024 has been a fascinating mix of stellar debuts, consistent performers, and unexpected underperformers. At Motilal Oswal, our team has analyzed these trends in detail, and I thought of sharing some key highlights from our comprehensive report. -Of the 78 main-board IPOs, 54 (69%) are trading at a premium to their offer prices, with 11 delivering gains of over 100%. -Among the top 20 IPOs by issue size, 16 are trading above their offer prices. Leading the pack is Premier Energies, up 194%, followed by Bharti Hexacom (+155%), Waaree Energies (+106%), Bajaj Housing (+84%), and Swiggy (+50%) -On debut performance, Bajaj Housing gained 136%, Premier Energies (+87%), Waaree Energies (+55%), Brainbees Solutions (+46%), and Bharti Hexacom (+43%) -Only three IPOs in the top 20—ACME Solar (-12%), Hyundai Motor (-7%), and Sagility India (-2%)—debuted below their offer prices. Sector performance highlights: 70% of the sectors are trading above their listing day prices. -Top performers: Consumer Durables (+77%), Logistics (+57%), Capital Goods (+51%), Chemicals (+35%), and Metals (+32%) -Laggards: Oil & Gas (-29%), NBFCs (-17%), Hotels (-9%), Retail (-8%), and Private Banks (-6%) The IPO landscape continues to reflect a robust appetite for equities, with key sectors outperforming expectations. *This content is for informational purposes only and is not intended as financial advice, or recommendation of any sort #Ipo #Update #MotilalOswal #Research #Report

Biotech investing is a complex business, as seen in last year’s IPO class, where >80% of listings trade well below their IPO price. So how did some companies buck the trend? In 2024, 18 newly US-listed companies collectively raised ~$3.6 billion. Looking back at 2024’s IPOs, only 2 of the 18 are trading above their IPO price - here’s a closer look at both: CG Oncology (NASDAQ: CGON) Performance: The company priced its initial public offering last January at $19.00 per share, raising $380 million, while its stock currently trades at ~$26, a ~40% premium. Key Asset: Its lead candidate, cretostimogene grenadenorepvec, is an investigational, intravesically delivered oncolytic immunotherapy engineered to selectively replicate in retinoblastoma (Rb) gene pathway-defective cells found in the majority of urothelial carcinomas. This therapy not only lyses tumor cells but also triggers an anti-tumor immune response via the release of granulocyte-macrophage colony-stimulating factor (GM-CSF). Key Driver: CG Oncology’s focus on bladder cancer drives investor interest given the clear unmet need in the space. Its development program features two Phase 3 trials—BOND-003 for high-risk, BCG-unresponsive NMIBC and PIVOT-006 for intermediate-risk NMIBC—along with Phase 2 investigations in CORE-008 and a combination trial with pembrolizumab (CORE-001). A catalyst for the IPO was the data from the BOND-003 trial, which demonstrated that 74.5% of patients achieved a complete response, with a median duration of response exceeding 27 months, alongside favorable safety and tolerability. Arrivent BioPharma (NASDAQ: AVBP) Performance: The initial IPO price was $18.00, and Arrivent ended 2024 trading at ~$26, and currently sits just above its IPO price. Key Asset: Arrivent’s lead asset, firmonertinib, is an oral, highly brain-penetrant, mutation-selective EGFR inhibitor. Designed to target both classical and uncommon EGFR mutations—including exon 20 insertions and PACC mutations—firmonertinib addresses a critical need in non-small cell lung cancer (NSCLC), where up to 70% of patients with specific mutations develop brain metastases. Key Driver: Arrivent’s dual clinical program—featuring the Phase 3 FURVENT trial for first-line NSCLC patients and the Phase 1b FURTHER trial for EGFR PACC mutations—has been a pivotal catalyst. FDA Breakthrough Therapy and Orphan Drug Designations further validate firmonertinib’s potential to become a transformative treatment. Arrivent continues to build out its portfolio, and entered into a potential $1.2B+ deal with a Shanghai-based biotech, Lepu Biopharma, in January to develop a gastrointestinal cancer antibody-drug conjugate (ADC). 2025 has seen 5 IPOs so far, with 3 trading under their IPO price (each by more than 30%) and two above, with obesity-focused Metsera being the biggest gainer. Time will tell how many are able to keep their gains as trials progress, and new data appears.

Insights from the IPO FRENZY in 2024 Did anyone make money in 2024?  Yes and No! 📈 Total IPOs: 93 ✅ Positive Listing Day Gains: 72 IPOs ❌ Negative Listing Day Gains: 21 IPOs What do the numbers tell 🔻 ✅ The Initial Hype Was Real •⁠ ⁠A 29.4% average listing gain means demand for newly listed companies was strong, especially in a bull cycle where retail participation has increased. However, the question that should be asked is: Did fundamentals support this hype? •⁠ ⁠Retail-driven IPO spikes were evident in some cases, reflecting momentum investing rather than long-term fundamentals. ✅ Post-Listing Performance •⁠ ⁠While 72% of IPOs saw a positive start, the 41.8% average year-end gain indicates a slower climb post-listing. •⁠ ⁠A lot of companies especially in consumer goods sector saw significant correction. ✅ Sector Trends Winners: Aerospace, Manufacturing, and Financial Services. Underperformers: Consumer Goods and Fintech. 🔻 Counterintuitive Takeaways 1️⃣ IPO Volume ≠ Stronger Market Health The sheer number of IPOs doesn’t guarantee market strength—it often reflects overconfidence and liquidity excess. The surge in listings could be a reaction to favourable market conditions rather than solid business fundamentals. 2️⃣ Retail Participation is a Double-Edged Sword A significant driver for the IPO surge was retail participation, often driven by listing gains rather than long-term value creation. This definitely raises concerns about momentum-driven valuations over genuine growth metrics. 3️⃣ High Valuations don’t mean stronger fundamentals Several IPOs priced aggressively have seen mid-year corrections despite strong listings. #finance #stocks #ipo #investing #founders

Exceptional Performance of IPO Funds in the Saudi Market 🔸 Key Highlights of Performance in the Saudi Market IPO funds have witnessed a golden era, achieving their best performance in four years, thanks to the momentum of IPOs and strong stock performance in the Saudi market during 2023. 🔸 Analysis of Returns: Broad and Profitable Range The annual return on these funds varied between 27% and 44%, indicating significant profits for the investors participating in these funds. 🔸 New Stocks: Stars of the Market Stocks like "Alam," launched in 2022, and Al Habib listed in 2019, achieved tremendous gains exceeding 540% and 500% respectively, reflecting the remarkable success of some new IPOs. 🔸 The Other Side: IPOs with Negative Performance Not all IPOs achieve success. Companies like "Al Naifat" and "Al Saif Gallery" experienced significant losses post their public offerings. 🔸 Size and Strength of IPO Funds The net assets of these funds are estimated at around SAR 451 million (approximately USD 120 million), compared to SAR 170 billion (about USD 45.3 billion) in total market offerings. 🔸 Leadership in Funds ▪️ Al Arabi Financial Fund tops with the best return at 43.6%. ▪️ Al Inma Fund is the largest in terms of net assets, with about SAR 210 million. ▪️ Assets and Bakhit Fund specializes in Sharia-compliant stocks with a 39% return. ▪️ Al Rajhi IPO Fund aims to grow capital through well-researched investments in IPOs. #IPO #StockMarket #Investment #SaudiMarket #Finance #AssetManagement #FinancialPerformance #MarketAnalysis #AlArabiFund #AlInmaFund #ShariaCompliantInvesting #AlRajhiIPOFund #SaudiArabia