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1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errorsWaiting after an IPO can give you more information before you decide whether the stock’s public-market price is reasonable. It is not a reliable way to guarantee a lower price or higher return: historical studies do not identify a universally effective waiting period.
What waiting can—and cannot—do
When a company goes public, its offer price, its first-day closing price and the price available to investors buying in the market are different reference points. Unless you receive shares in the offering, you cannot count a rise from the offer price as a return you personally earned. Your result depends on the price at which you buy and what happens afterward.
Waiting can help you observe early trading, compare the company’s valuation with public peers, and reconsider its business risks and fit in your portfolio. But a few days or weeks of trading do not create a dependable long-term record, and waiting does not ensure that the stock will become cheaper. If it never reaches a price you consider reasonable, not buying is a valid decision.
What historical IPO returns show
Jay R. Ritter’s 1991 study examined 1,526 U.S. common-stock IPOs issued from 1975 through 1984. It measured aftermarket performance from each stock’s first-day closing price, thereby excluding any gain from the offer price to that close. Over the following three years, the IPO sample had an average holding-period return of 34.47%, compared with 61.86% for matched listed companies. Ritter reported a wealth relative of 0.831, meaning the IPO sample’s average gross wealth outcome was lower than the matched sample under his methodology. He summarized the result: “In the long run, IPOs underperformed.” Read the study.
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The same paper reported an average initial return of 16.4% from the offering price to the market price at the end of the first trading day. That is a historical estimate, not a current-market average, and the paper notes that initial underpricing was highly cyclical. A first-day jump and a later holding-period return measure different things.
These results describe a particular sample and benchmark, not a forecast for a specific IPO or for listings in 2026. IPO markets, company mix and investor access change over time. The study does not show that waiting a set number of days, months or until a particular event will outperform buying earlier.
Why a first-day pop is not a buy signal
Ritter and Ivo Welch’s 2002 review found that IPOs priced high relative to comparable public companies tended to have weaker long-run performance in studied samples, despite higher first-day returns. But the review also cautions that short-run underpricing does not have a reliable general relationship with long-run performance. Findings can change with sample composition, including the treatment of penny-stock IPOs and the internet-bubble period. Even where average underperformance appears, consistently exploiting it is difficult. Read the review.
So neither a strong opening nor a weak one settles whether a company is a good investment at its current price. A first-day move can reflect demand and initial pricing; it does not by itself establish intrinsic value or a durable trend.
A practical framework for deciding when to buy
1. Know which price you can actually access
Ask whether you have a realistic chance of receiving an offering allocation or will buy after public trading begins. If you enter after the shares open above the offer price, the offer-to-market increase is not your gain. A post-listing purchase is ordinarily made through a standard brokerage account.
2. Judge valuation alongside the business
Consider the company’s financial condition and prospects, then compare its valuation with relevant public companies. Strong fundamentals do not necessarily make a stock attractive at any price. The 2002 review’s finding about high relative valuations is a reason to examine the entry price, not a formula for predicting a particular IPO’s return.
3. Treat early trading as information, not proof
Early weeks of trading can be volatile. More trading may help you see how the market is valuing the shares, but a short price history is not evidence of a stable long-term pattern. Decide in advance what information would change your view rather than treating any dip or rally as a signal.
4. Read the risks and check portfolio fit
Review the prospectus, especially its risk factors. Consider your time horizon, risk tolerance and how the position would affect your portfolio’s concentration. The practical questions of business model, volatility and portfolio fit are also outlined in Kiplinger’s IPO decision framework.
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Define what price or valuation you would consider reasonable given the company’s prospects and risks. If the market never offers that entry point, you are not obliged to buy merely because the IPO is new or has attracted attention. This is a disciplined reassessment process, not a “wait for the dip” rule.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Should you wait for the IPO lockup to expire?
Lockup expiration can be relevant because it may allow insiders to sell shares, but it is not an evidence-backed universal timing rule. The available practical guidance discusses lockup-related selling without establishing that waiting for expiration reliably improves returns. Treat the date as one possible factor to understand, not a guaranteed buying opportunity.
How long should you wait?
There is no universally supported number of days or months. The useful question is whether waiting gives you information that could change your decision: a clearer valuation, a better understanding of the company’s risks, or evidence that the stock fits your portfolio at its current price. If not, waiting for its own sake has no demonstrated advantage. Historical averages cannot determine whether an individual IPO is fairly valued today.
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