If you’re looking for hot growth stocks, initial public offerings (IPOs) are a great place to start your search. These freshly minted public companies tend to make a splash in the market with big growth expectations and high price tags to match. Although not every IPO stock will be a winner, some of the most valuable companies in the world, such as Amazon (AMZN -5.49%) and Apple (AAPL +0.87%), were once initial public offerings and have turned early investors into millionaires.
What is an IPO stock?
An IPO stock is a stock that has recently gone public. That means it has gone through the process of selling its shares to a group of investors, typically with the help of an underwriter, and then listing the stock with an exchange like the New York Stock Exchange or the Nasdaq Stock Exchange, where investors can easily buy and sell it.
A company can sell more shares to the public in what's typically known as a follow-on offering, or shares can be sold through a secondary offering. There is an important distinction between the two, though they are sometimes used interchangeably.
- Follow-on offering: A follow-on offering refers to a company selling its stock after its IPO. Companies are free to do this at any time, though they must file with the U.S. Securities and Exchange Commission (SEC), and it means that existing shareholders will be diluted. This can also be called a primary offering.
- Secondary offering: A secondary offering refers to a block of stock being sold by an existing shareholder, not the company. This also typically requires public notification through an SEC filing. The main difference between a secondary and a primary offering is that a secondary offering doesn't dilute existing shareholders, though it also doesn't raise any money for the company.
Recent IPOs
After a boom in IPOs during the COVID-19 pandemic, the IPO market went ice-cold in 2022 as tech stocks plunged and interest rates soared. However, as the Nasdaq Composite has bounced back, the IPO market has shown signs of life once again, with several new issues debuting over the last year.
1. CoreWeave
NASDAQ: CRWV
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CoreWeave (CRWV +20.50%), a generative artificial intelligence (AI)-focused cloud infrastructure business, had a disappointing IPO, but the stock has surged since then, gaining more than 300% from its IPO price of $40 at one point, though it gave back much of those gains in a November tech sell-off. Fund manager Michael Burry, known for "The Big Short," said AI stocks like CoreWeave were underestimating depreciation for graphics processing units (GPUs), showing the high risk of the company's business model.
CoreWeave's IPO came at the end of March 2025, when concerns about tariffs, weakening consumer sentiment, and a potential slowdown in AI spending weighed on the market. The IPO was undersubscribed, and the offering was priced below its target range. Nvidia (NVDA +8.01%), a major customer, bought into the offering, helping to make it happen.
As confidence in the economy returned, CoreWeave stock soared. The company is delivering skyrocketing growth with revenue up 134% in the third quarter, showing soaring demand for the AI computing power that it offers. However, CoreWeave is still deeply unprofitable on a generally accepted accounting principles (GAAP) basis and has high customer concentration, making it risky. Its business model also requires heavy spending on capital expenditures, buying GPUs that it essentially rents out as computing power to customers, meaning it has considerable debt and high interest expenses.
It's a risky stock, but its growth rate shows it has huge potential. It's also a rare pure-play AI stock.
2. Figma
NYSE: FIG
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Figma (FIG -0.95%) is one of the newest companies to go public with its IPO at the end of July.
The stock soared initially as Figma has built a strong business around design software with a stable of top customers, strong top-line growth, GAAP profits on the bottom line, and new AI-powered products.
Prior to going public, Figma was in the news for agreeing to be sold to Adobe for $20 billion. However, regulators broke up the deal, claiming that it was anti-competitive.
Though Figma still competes against Adobe, the company has arguably the leading brand in user experience and user interaction (UX/UI) software, and has a bright future in front of it.
The company is investing aggressively in AI and recently popped after OpenAI touted a Figma integration.
Since surging on its IPO, the stock has faded on concerns about overspending on new products, broader concerns about valuation, and pressure on SaaS stocks due to fears about disruption from AI. In February 2026, the stock was trading down about a third from $33 IPO price with a market cap well below Adobe's buyout offer of $20 billion.
3. Circle
NYSE: CRCL
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NASDAQ: OMDA
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After years under the umbrella of eBay and then Viagogo, a ticket exchange platform, StubHub went public in September 2025.
Stubhub is not a new company by any means, having been founded in 2000 in the dot-com boom. While it's growth has slowed over the years, the company has an attractive business model, thanks to the network effects endemic in secondary ticketing platforms.
It's the largest secondary ticket marketplace in the world, though it trails Ticketmaster as the largest overall ticketing platform.
After a boost from Taylor Swift's Eras tour, Stubhub experienced a downshift in revenue growth in 2025. Through the first three quarters of 2025, revenue grew just 5% to $1.17 billion.
The company has historically been profitable on a cash basis, but it has $1.6 billion in debt, much of which came from its acquisition by Viagogo.
Its first few months as a public company have been a disappointment, with the stock down more than 50% from its $23.50 IPO price as of Feb. 2026.
IPO stocks to watch in 2026
1. OpenAI
OpenAI is one of the most anticipated IPOs in Wall Street history as the generative AI leader was valued at $500 billion in its most recent funding round, and the company is in talks to raise tens of billions of dollars more from Amazon and Nvidia.
While it's been easy for the company to raise money in the private markets, the ChatGPT creator could go public as soon as this year.
According to The Wall Street Journal, the company is preparing for a public offering in the fourth quarter, aiming to beat rival Anthropic to market. The company recently restructured its business as a for-profit enterprise and defined the stakes that investors like Microsoft hold in the company.
2. Anthropic
Not to be outdone, Anthropic, the other leading AI company and maker of the Claude chatbot, is also reportedly planning its own IPO.
The start-up was valued at $350 billion in its last funding round, and, as of Feb. 2026, was close to raising $20 billion in another round.
In December, Financial Times reported that Anthropic had hired the law firm Wilson Sonsini to prepare for an IPO that could happen as early as 2026.
Anthropic has gotten a lot of attention for its Claude Code tool, which has driven a sell-off in software stocks, as some investors believe it could replace a lot of traditional coding and software.
3. SpaceX
SpaceX, Elon Musk's aerospace company, is also on the list of high-profile companies that could go public this year. Musk himself has confirmed reports that the company intends to go public this year, and an offering could come as soon as June.
The Wall Street Journal said Musk's lieutenants have reached out to index managers to secure earlier inclusion for the company, a strong sign of its intention to go public.
SpaceX also recently merged with xAI, Musk's AI company, presumably in part to beef up SpaceX's prospects ahead of an IPO.
How an initial public offering (IPO) works
An IPO is how most companies go public, although it's not the only way. Companies can also go public through a direct listing, simply making the stock available to the public, or through a special purpose acquisition company (SPAC).
However, of those options, the IPO is the only one that raises money for the company.
The IPO process typically begins with a company hiring investment bankers to serve as underwriters. It then files a prospectus or a Form S-1 with the SEC, providing comprehensive information about the company, including its financial results, risk factors, and growth strategy. The filing typically happens four to six weeks before the stock begins trading.
From there, the company will go on a roadshow, pitching the stock to institutional investors. Shortly before the IPO, the IPO price is set, meaning how much investors buying the IPO will pay per share.
Once it begins trading on an exchange, investors are able to buy and sell it like they would any other stock.
How to evaluate an IPO stock
If you're considering investing in an IPO stock, you'll want to consider some of the same factors you would with any stock, though IPOs lack some useful indicators, such as a track record.
Once a company files its S-1 prospectus, you can get a good look at its finances. Find out how fast its revenue is growing, and if the company is profitable. If not, does it have a realistic path to profitability?
Consider the company's business model. Is it a brand new concept, or is it a tried-and-true model like cloud software?
Valuation is also worth considering. Plenty of IPOs have promising businesses, but are simply overvalued following their debuts. IPOs tend to be volatile, and it's a good idea not to chase a hot IPO if its valuation seems unreasonable.
How to buy IPO stock
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Pros and cons of investing in IPO stocks
There are a number of pros and cons to investing in IPO stocks. Let's review some of the big ones.
Pros:
- Investing in IPOs can get you exposure to big winners.
- Most top stocks were once IPOs.
- You can get in early on a stock you like.
Cons:
- Most IPOs underperform the market.
- IPOs tend to be more volatile and riskier than the average stock.
- It can take time for an IPO to find equilibrium in the market, and it's hard to know where it will settle.
In general, IPOs offer substantial potential upside and occasionally produce big winners, but most debuts do not perform as well as the S&P 500, whose stocks have proven their mettle on their way to earning membership in the index.
Related investing topics
IPO stocks vs. regular stocks
In some ways IPO stocks are similar to regular stocks. After all, IPO stocks become regular stocks with enough time, but there are key differences between the two.
- IPO stocks tend to be more volatile than established stocks
- IPO stocks are typically growth stocks, though any type of company can go public.
- IPO stocks almost never pay dividends, and generally won't for several years.
- IPO stocks are often unprofitable.
- IPO stocks are subject to lockup periods, often six months, that restrict insiders from selling their shares. Once the lockup period ends, the stock can fall if too many insiders sell.
- IPO stocks are not included in indexes like the S&P 500, which generally require a company to have been public for a year.
How do market conditions affect IPOs?
IPOs are highly sensitive to market conditions, and start-ups typically time their public offerings carefully.
Start-ups tend to time their offerings when demand is high. That generally means there is a bull market and adequate enthusiasm for the type of business. For instance, there have been several AI-related IPOs in the last year or two due to the excitement around AI. During the COVID-19 pandemic, there were a lot of tech IPOs because tech demand soared in that era because of the constraints of the pandemic. Conversely, in 2022, IPOs froze as stocks entered a bear market and tech stocks plunged.
Given the strength of the current bull market, the pace of new offerings has been somewhat slow, but that could change. There are a number of high-priced start-ups like OpenAI, Anthropic, and SpaceX that are likely to go public in the coming years.
Once they are public, IPO stocks are more sensitive to market conditions. They can also be subject to initial waves of euphoria, like with Figma, that send the stock skyrocketing and then crashing.
FAQ
IPOs: FAQ
About the Author
Jeremy Bowman has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon, Apple, and Nvidia. The Motley Fool recommends Nebius Group. The Motley Fool has a disclosure policy.
