Majority of Investors Are Negative on Recent IPOs

This week’s Sentiment Survey special question asked AAII members what they thought about this year’s initial public offerings (IPOs), including companies such as Lyft, Uber and WeWork (the latter of which recently postponed its plans to go public). The results were skewed negatively, with approximately 43% of respondents stating that IPOs in 2019 are premature and too risky at this stage given the current market outlook. Many respondents cite unprofitably, unclear business models and industry saturation. Additionally, 32% of respondents say that recent IPOs have been consistently overvalued and believe that investors will face serious losses. On the other hand, just 1% of participants believe that IPOs in 2019 have been solid but are expecting a fewer number of IPOs going forward. Finally, 23% say that they do not factor IPOs into their investment decisions, citing similar reasons including overvaluation and too high of a risk.

Here is a sampling of the responses:

• “All of the IPOs seem way overvalued when they come to market. Eventually, they have to drop down to a somewhat reasonable valuation, if there is any.”
• “Another example of the madness of crowds, fueled by investment bank greed. Can anyone say dot-com boom?”
• “I think Lyft and Uber will do just fine, I believe they have the resources to be successful with whatever they attempt to do.”
• “I prefer to invest in established companies and generally avoid IPOs. I believe in the saying: ‘IPO stands for It’s Probably Overpriced.’”

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