Does It Pay to Buy an IPO Stock?

Fireworks

by Fred Fuld III and Nkem Iregbulem

Have you ever tried to get in on a hot Initial Public offering but missed out? Suppose you could have been able to get some shares on the IPO. Do you think it would have worked out?

We ran an analysis of a large selection of all the stocks that went public during the first half of the year, to determine how successful the IPO shareholders would have been. We looked at both the return on the day of the IPO and the return from the IPO to the end of June.

You will notice that of the 23 stocks, some of the stocks were down on the first day of trading but ended up year-to-date. One example is Evolus (EOLS), a provider of Botox aesthetic treatments and procedures. The stock was down 4% on the day of the IPO but increased by 128% from its IPO in February to the end of June.

The mean average of the percentage returns for the stocks on the day of the IPO was 5.78%. The overall mean average of the returns from the day of the IPO to the end of June was 18.84%. That is a decent return, especially when you consider that the S&P 500 was only up 0.8% over the same period.

The details can be found below:

Company Symbol IPO price End of IPO Day Price %chg Price End of June %chg
Neuronetics STIM 17.00 27.78 63% 27.78 63%
Entera Bio ENTX 8.00 6.28 -22% 5.99 -25%
HyreCar HYRE 5.00 5.10 2% 4.89 -2%
The Lovesac Company LOVE 16.00 23.99 50% 21.33 33%
Chicken Soup for the Soul CSSE 12.00 9.25 -23% 9.56 -20%
I3 Verticals IIIV 13.00 18.35 41% 14.75 13%
Magenta Therapeutics MGTA 15.00 14.52 -3% 13.68 -9%
ElectroCore LLC ECOR 15.00 19.85 32% 17.46 16%
Iterum Therapeutics ITRM 13.00 12.24 -6% 11.50 -12%
Hancock Jaffe Laboratories HJLI 5.00 5.24 5% 3.40 -32%
CLPS Incorporation CLPS 5.25 5.04 -4% 13.43 156%
Aslan Pharmaceuticals ASLN 7.03 5.61 -20% 7.78 11%
GrafTech International EAF 15.00 14.45 -4% 18.46 23%
Biofrontera BFRA 9.88 12.18 23% 11.99 21%
Motus GI Holdings MOTS 5.00 4.38 -12% 7.27 45%
Victory Capital VCTR 13.00 11.60 -11% 10.10 -22%
Evolus EOLS 12.00 11.50 -4% 27.32 128%
One Stop Systems OSS 5.00 4.88 -2% 4.45 -11%
Genprex GNPX 5.00 4.50 -10% 7.90 58%
Pagseguro Digital PAGS 21.50 29.20 36% 27.82 29%
EyeNovia EYEN 10.00 9.92 -1% 6.45 -36%
Nine Energy Service NINE 23.00 26.10 13% 33.04 44%
ADT ADT 14.00 12.39 -12% 8.46 -40%
AVERAGE 5.78% 18.84%