US Stock IPO Performance Study: A Guide for Malaysian Investors
An Initial Public Offering (IPO) is the first process every new company must go through to be listed on any stock exchange in the world. This is the process where a company raises the capital it needs to grow its business. In exchange, they sell a portion of their shareholding to the public. Studying the performance of US IPOs is crucial if you wish to participate in IPO investing in the United States.
The United States (US) Market
It is widely known that the US stock market is the most closely watched market in the entire world. The number of counters listed on the US market exceeds 10,000. Naturally, every year there will be even more companies looking to be listed on this highly influential stock exchange.
Why Study IPO Performance
Studying past IPO performance is extremely important, especially for investors looking to profit through the IPO process. Whether applying during the float or employing other strategies such as profiting on the first day of trading. So let us together examine the performance of the 20 most recent IPOs on the US market (this article was written on 18 May 2023).
Latest IPO Performance
| No. | IPO | IPO Date | First Day (%) | After 30 Days (%) |
| 1 | Alchemy Investments Acquisition Corp 1 | 5/5/2023 | +1.10% | N/A |
| 2 | ACELYRIN, Inc. | 5/5/2023 | +30.56% | N/A |
| 3 | Kenvue Inc. | 4/5/2023 | +22.27% | N/A |
| 4 | Golden Star Acquisition Corp | 2/5/2023 | +1.50% | N/A |
| 5 | Interactive Strength, Inc. | 28/4/2023 | -17.37% | N/A |
| 6 | Jayud Global Logistics Ltd | 21/4/2023 | +26.00% | N/A |
| 7 | U Power Ltd | 20/4/2023 | +619.67% | N/A |
| 8 | U.S. GoldMining Inc. | 20/4/2023 | -9.60% | N/A |
| 9 | WANG & LEE GROUP, Inc. | 20/4/2023 | -38.00% | N/A |
| 10 | Top KingWin Ltd | 18/4/2023 | +5.00% | N/A |
| 11 | Trio Petroleum Corp. | 18/4/2023 | -24.33% | N/A |
| 12 | CytoMed Therapeutics Ltd | 14/4/2023 | N/A | -26.75% |
| 13 | VCI Global Ltd | 13/4/2023 | +6.25% | -25.25% |
| 14 | GOLDEN HEAVEN GROUP HOLDINGS LTD. | 12/4/2023 | +0.25% | +5.00% |
| 15 | ARB IOT Group Ltd | 5/4/2023 | -3.75% | -3.25% |
| 16 | Ispire Technology Inc. | 4/4/2023 | +7.86% | +25.71% |
| 17 | Millennium Group International Holdings Ltd | 4/4/2023 | -19.75% | -54.00% |
| 18 | Multi Ways Holdings Ltd | 3/4/2023 | +254.80% | -50.80% |
| 19 | HiTek Global Inc. | 31/3/2023 | +11.20% | +14.40% |
| 20 | SHENGFENG DEVELOPMENT Ltd | 31/3/2023 | +0.50% | +2.75% |
Observations on Past Performance
Based on the data from the 20 most recent IPOs listed in the US, several observations can be identified:
- On the first day of trading, the number of profitable companies exceeded those that made a loss — 12 counters were profitable whilst 7 counters experienced losses.
- After 30 days of trading, 4 counters recorded profits whilst 5 counters showed losses.
- The highest gain on the first day of trading was +619.67% (U Power Ltd), whilst the worst loss was -38.00% (WANG & LEE GROUP, Inc.)
Conclusion
From the brief observations obtained, there is no truly robust hypothesis that can be formed. It is possible that a more in-depth study needs to be conducted, taking into account factors such as the IPO sector involved, market conditions on the first day of trading, and potentially increasing the number of IPOs studied.
The US market is the most closely watched market in the entire world. Every market has its own characteristics. One cannot simply study the Bursa Malaysia market and assume the US market will show the same results. Different markets, different behaviours.
As an investor or trader, the most important thing to do is to have the knowledge and conduct thorough research before making any investment transactions. This can increase the likelihood of profit and also reduce risk.
Deepen Your US Market Knowledge
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Frequently Asked Questions (FAQ)
1. What is an IPO and how does it work in the US market?
An IPO or Initial Public Offering is the process where a company offers its shares to the public for the first time. In the US market, an IPO allows investors to purchase shares of a potentially high-growth new company at the initial price before it is traded on the exchange.
2. Is investing in US stock IPOs suitable for Malaysian investors?
Yes, Malaysian investors can participate in US stock IPOs through legitimate global brokers. However, thorough research is necessary as not all IPOs deliver positive returns on the first day or in the long term.
3. What are the main risks of investing in US stock IPOs?
The main risks include high price volatility on the first day of trading, lack of historical performance data for the company, and current market conditions that can suddenly affect IPO share prices.
4. How do I open an account to invest in US stocks?
You can open a global stock account through Mplus Global. The registration process can be completed online and you can begin investing once your account is approved.
Conclusion
This study of US stock IPO performance demonstrates that IPO investing requires careful research and a deep understanding of market risks. Every market has its own characteristics and smart investors need to be equipped with sufficient knowledge.
Start your global investment journey today. Open a CDS account for the Malaysian market or register for a global stock account, and download our free investment basics ebook to build a solid foundation.