Chart of the Day: IPO Returns - Post IPO

Today’s Chart of the Day, found in arvy weekly's "The IPO Class of 2026" illustrates how stocks have historically performed following an IPO, or initial public offering.

While IPOs often generate excitement, many newly public companies tend to underperform their broader market benchmarks in the following years. This becomes apparent as early as six months post‑IPO.

Benjamin Graham, the father of value investing and author of The Intelligent Investor, was a well‑known IPO skeptic, arguing that new issues are frequently overpriced due to optimistic narratives and underwriter incentives.

IPOs often come to market during favorable conditions, supported by recent growth and strong sentiment, while investment banks have a vested interest in higher offering prices. As a result, IPOs can become more of a marketing exercise than a reflection of intrinsic value, underscoring the importance of evaluating fundamentals and allowing time for meaningful performance data to emerge.