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I need to share something that’s been bothering me for a while.
These high-profile Initial Public Offerings (IPO) everyone is excited about — SpaceX, Anthropic, Figma — are setting up to be traps.
I’m not saying these aren’t great companies. But by the time public investors get access, much of the value has already been extracted.
The Private Market Shell Game
Many recent IPOs have been marked up repeatedly through private funding rounds before ever going public. In some cases, there have been more than a dozen private offerings.
Years ago, a company went public once. Today, the “initial” part of IPOs is mostly symbolic. The real gains went to early private investors, many of whom are waiting for the first opportunity to sell…
To you.
Valuation stories are often padded with headline-friendly themes. Add an AI angle, inflate the narrative and the valuation jumps — regardless of whether the underlying business justifies it.
Share structure plays a role too. Create massive share counts and suddenly per-share pricing looks reasonable, even if the business fundamentals haven’t changed.
Look at recent examples. Some IPOs priced near $24, only to sell off sharply soon after listing. Others followed the same pattern, leaving public investors holding losses.
While IPO shareholders often face lockups, liquidity still appears at the top, and prices frequently peak early before breaking down.
Platforms like Forge and EquityZen reveal how many private rounds a company completed before going public. Each round pushes valuations higher, leaving little upside for new investors.
The Pattern You Need to Recognize
Private investors who’ve held these companies for years are eager to sell the moment shares list. Their exit often comes at the expense of public buyers…
And again, that’s you.
This isn’t a conspiracy. It’s a structural shift in how companies go public.
When the next high-profile IPO hits the headlines, remember this — the valuation game was already played before you were invited.
I’m staying away from these setups, and you should think carefully before jumping in.
Trade well,
Jack Carter
Jack Carter Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. Don’t Let the Recent Gold Dip Fool You
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Are you interested?
Disclaimer: We develop strategies to the best of our ability, but we cannot guarantee a future return. There is always a risk of loss when trading. Past performance is not indicative of future results. Since 12/05/2024, the trading approach discussed today has published 54 trade alerts. All 54 have returned as winning trades, for a 100% win rate. The average return per trade, winners and losers combined, has been 16.88% on an average holding period of 9 days.
