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I analyzed 70 U.S. IPOs from 2021–2025 across valuation size, sector, and vintage year to understand what actually happened after companies went public.
The issue is not that companies cannot go public. The issue is that both private and public markets spent years pricing companies as if growth, liquidity, and multiple expansion would continue indefinitely.
2021 was the clearest example of this distortion.
397 U.S. IPOs raised over $142B, the largest IPO year ever by proceeds. Companies entered the public markets during a period of zero interest rates, massive liquidity, meme-stock psychology, retail speculation, and a broader environment where future narratives mattered more than present cash flows.
Then rates moved from near 0% to over 5%, and long-duration growth assets repriced across the market.
The broader IPO market reflects that shift clearly. Most 2021 IPOs still trade below their IPO price today, and many are down 70–90% from peak valuations.
In the cohort I analyzed: • 81% of 2021 IPOs are still underwater • 11 lost more than half their value • several declined 70–90%+
Examples include $BIRD, $BMBL, $TASK, $SG, and $LZ.
Many of these were not fundamentally bad businesses. They were simply priced as if execution risk no longer existed.
The most interesting finding from the dataset was what I call the “Valuation Smile.”
The best IPO outcomes did not come from the largest companies. The strongest-performing cohort was companies that went public between roughly $1B–$2B in valuation.
That bucket had: • a 50% win rate • a 571% average return • zero companies that lost more than 50%
Companies like $CRDO, $ATAT, and $KGS materially outperformed after listing because they were large enough to prove durability, but still small enough to compound meaningfully in public markets.
Meanwhile, the $10–20B IPO range was the weakest-performing category in the dataset: • only a 20% win rate • negative average returns • several of the sharpest post-IPO drawdowns
Examples include $TASK, $DNUT, and $DOCS.
Historically, IPOs helped fund future growth. Increasingly, modern IPOs function more as late-stage liquidity transitions after private markets have already priced in years of future success.
The public market used to fund upside. Today it often inherits fully-priced upside.
That changes the entire psychology of the IPO.
Once a company IPOs above roughly $40–50B, the math becomes extremely difficult. A company entering the market at those valuations already needs extraordinary scale to generate venture-like public returns.
The data reflects this clearly.
The $40B+ IPO bucket had: • a 17% win rate • a -50% median return • half the companies losing more than 50% of their value
Examples include $RIVN, $DIDI, and $VG, while $ARM was one of the few major exceptions.
The sector divergence was equally important.
Semiconductors and AI infrastructure significantly outperformed, including $CRDO, $ALAB, and $ARM. Meanwhile many SaaS IPOs remained underwater, including $BRZE, $TOST, $KVYO, and $TASK.
In 2021, high-growth SaaS companies often traded at 20–40x revenue. Today many still-growing SaaS businesses trade closer to 4–8x revenue despite continuing to grow.
The market did not stop rewarding growth. It became more selective about which types of growth deserved premium multiples.
Infrastructure scarcity, semiconductors, compute demand, and AI leverage replaced the old “growth at any price” framework that dominated the ZIRP era.
Analyst expectations evolved as well. During the 2021 cycle, markets tolerated heavy cash burn, slowing margins, and distant profitability because revenue growth alone justified premium valuations.
Today the market demands operating leverage, margin durability, AI positioning, and clearer paths to cash flow generation. One earnings miss or guidance cut can erase years of momentum because expectations are materially less forgiving.
This is why I think the broader conversation around IPOs misses the point.
The IPO market itself is functioning.
Companies are still going public. Capital still exists. Liquidity still exists.
What changed was the market’s tolerance for unrealistic expectations.
Retail investors, analysts, crossover funds, growth-stage private markets, and media narratives collectively created an environment where companies were expected to enter public markets already fully optimized.
That is not how long-term compounding typically works.
The best public companies historically had room to grow after listing. Many modern IPOs arrive carrying aggressive private-market marks, ambitious analyst models, and years of future success already embedded into the valuation.
Then the public market simply reprices reality.
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