IPO Chasing

I think managing fear and fear of missing out (FOMO) is the toughest and most valuable part of the work I do. And nothing drives FOMO more than initial public offerings (IPOs).

I received a ton of calls about IPOs in 2021.*

Historically, IPOs have been terrible investments. And the “New Issues Puzzle” research paper, a study from Dimensional Fund Advisors in 2019, and the performance of the IPO ETF itself prove it.**

“But those are all old figures, Vince. That data is rife with Tech Boom/Bust data. Those companies aren’t SpaceX, OpenAI, and Anthropic!”

Because those three companies aren’t yet public, we can’t be one hundred percent sure of their valuation, but we have estimates. In fact, SpaceX is pricing its IPO as I write.

As of early June 2026, SpaceX is reportedly valued at more than 100x its sales, OpenAI at somewhere around 35x sales, and Anthropic at around 20-25x sales.*** Those figures change a lot week to week.

Two important things here:

I used price-to-sales. Not price-to-earnings. Price-to-sales! Earnings are after all expenses. Sales are before them.
The entire S&P 500 as of early June 2026, is valued at just shy of 3.75x its sales. So even if those three company’s actual valuations are half their reported valuations, they’re still valued at a lot more than the broad market.

But when you’re looking at IPOs through FOMO-coloured glasses none of that matters. So instead let me ask you a few questions:

Do you think buying shares in an IPO that everyone wants will result in you reaching your financial goals sooner?
Do you think if everyone buys that IPO, they’ll all – every last one of them – make life changing sums of money?
Do you think the people selling you their shares want to sell them when they can make the most money possible or the least?

The popularity of an investment means nothing. And I’m ready to be wrong short-term if it means I’m right in the long-term.

The names of the companies might change. But FOMO doesn’t care.

*Have a look at the long-term charts for Rivian, Coinbase, and Li-Cycle Holdings.

**Though I was aware of the Dimensional research and the IPO ETF, I wasn’t aware of the New Issues Puzzle paper. If you want to get lost in the data, have a look at this YouTube video from Ben Felix.

***These numbers change a lot because two of the three companies are still private, and SpaceX is pricing its IPO as I write. I’m using the most recent data available from a combination of data from The Globe and Mail, Yahoo Finance, the New York Times, The Wall Street Journal, and Reuters.

This post is for educational and illustrative purposes only. Any investments mentioned do not constitute a recommendation or solicitation to buy or sell any security. Past performance is not indicative of future results. Individual suitability varies. What works for one investor may not be appropriate for another. Please speak with your advisor before making any investment decisions. See additional disclosures at https://www.herlaarwm.com/vinces-blog