1. Executive Summary: 2025 Market Turn—From Recovery to Regulatory Bottleneck
The U.S. Initial Public Offering (IPO) market, after a cautious start to 2025, experienced a strong revival in the third quarter, raising over $29.3 billion in total proceeds, a 31% year-over-year increase. September alone saw 13 IPOs raise over $8 billion, marking the busiest month for new listings since November 2021. However, this momentum abruptly stalled in the fourth quarter, caught between the twin pressures of regulatory disruption and shifting investor sentiment.
The central constraint was a U.S. government shutdown. The shutdown resulted in the Securities and Exchange Commission (SEC) backlogging over 900 registration statements, creating a severe regulatory bottleneck that effectively closed the issuance window in November. Simultaneously, investors grew increasingly cautious regarding the aggressive valuations in the technology and Artificial Intelligence (AI) sectors following yet another year of double-digit market returns. While underlying institutional demand remains robust, operational friction means many IPOs originally scheduled for late 2025 have been pushed to 2026, setting the stage for a potential "clash of big deals" in the primary market next year.
2. 2025 Fourth Quarter Cooling Analysis: Macroeconomic and Regulatory Drivers
The Q4 slowdown in the IPO market was not due to a single cause, but a combination of hard regulatory operational limits and softer market sentiment constraints.
2.1 Regulatory Bottleneck: SEC Backlog and Operational Delay
The government shutdown directly impaired the SEC’s normal functioning, leading to furloughed staff and a complete pause on the review of new filing statements. This sudden interruption introduced fresh uncertainty for companies planning to list in the fourth quarter.
Post-shutdown, the SEC faces a massive workload backlog. The agency reportedly has over 900 registration statements filed during the closure that require processing. The Division of Corporation Finance confirmed it is working "expeditiously" to clear the backlog in the order received, but it remains unclear whether the typical 30-day review period can be maintained.
This regulatory inertia has immediate consequences: November 2025 is projected to be one of the slowest IPO months of the entire year. Market participants widely agree that the SEC will need time to clear "hundreds of registration statements," which means many late-2025 listings will be pushed into 2026.
Worth noting, the regulatory hurdle occurred concurrently with soft market sentiment. If market sentiment were overwhelmingly bullish, issuers might consider an "effective by operation of law" strategy under Section 8(a) of the Securities Act (automatic effectiveness after 20 days), bypassing a detailed SEC review. However, in the current cautious market, issuers are generally unwilling to proceed without the SEC's full review, as lacking thorough regulatory feedback increases legal liability risk (e.g., omissions or material misstatements) and diminishes institutional investor confidence. Thus, the regulatory delay provides a necessary and justifiable strategic pause for companies facing institutional pricing skepticism, preventing them from listing under unfavorable conditions.
2.2 Shifting Investor Caution and Valuation Fatigue
Investor caution has been on the rise following another year of double-digit market gains, leading to widespread concern that stock prices have become too expensive.
The technology sector, in particular, has faced pressure. The S&P 500 fell 3.5% in November, dragged down by concerns over valuations tied to Artificial Intelligence (AI) related stocks, signaling specific stress in the high-tech sector.
The market is raising the bar for issuing companies. Investors are no longer merely chasing high valuations but are instead rewarding companies with appropriate scale, strong growth prospects, achieved profitability, or a clear path to it. The market is rewarding companies that demonstrate operational maturity and capital discipline.
3. 2025 IPO Performance Scorecard: Volatility Analysis Post-Debut
Despite an average return of 20% for IPOs in 2025, which is nearly double the 10.7% return of the Morningstar US Market Index, many new listings have struggled to maintain their initial momentum, reflecting market volatility and strict investor focus on long-term viability.
3.1 Key Performance Data for Major 2025 U.S. IPOs
Table 1: Key Performance Metrics for Major 2025 U.S. IPOs (as of late Q4)
| Company Name | Industry Focus | Issue Price (USD) | Funds Raised (USD) | Current Price (approx. USD) | Post-IPO Performance (Change vs. Issue Price) |
|---|---|---|---|---|---|
| Figma (FIG) | Web Design Software | $33 | approx. $1.37 billion | Slightly above $33 | Essentially lost all gains; slightly above issue price |
| Klarna (KLAR) | BNPL Fintech | $40 | Over $1.3 billion | approx. $29 | approx. -27.5% |
| CoreWeave (CRWV) | Cloud/AI Computing | $40 | Target approx. $2.7 billion | approx. $72 | approx. +80% (pulled back from peak) |
| Navan (NAVN) | Travel/Software | $25 | $923 million | approx. $15 | approx. -40% |
| Central Bancompany | Financial Services | $21 | $373.3 million | $22.06 (Debut) | +5.05% on debut (Uplisting) |
3.2 Post-Listing Decline and Resilience Case Studies
The IPO market shows a clear disconnect between successful pricing strategy and actual post-listing performance, especially in the tech sector.
3.2.1 Figma: The Disconnect Between Hype and Reality
The web design software company Figma listed in July at $33 per share, with its stock tripling on the first day, soaring by 250%. Since then, however, the stock quickly lost nearly all its gains and is now trading only slightly above its IPO price. This phenomenon highlights the inherent tension in the pricing process: Institutional investors typically demand a lower issue price to ensure successful allocation, while the massive first-day pop reflects retail investor pursuit driven by market hype. However, institutional investors begin selling once they believe the price deviates from fundamental value, leading to a rapid decline.
3.2.2 Klarna: Fintech Struggles
Swedish "Buy Now, Pay Later" (BNPL) company Klarna listed in September at $40, raising over $1.3 billion. Yet, its stock subsequently dropped to around $29, a decline of approximately 27.5%. This performance sends a clear signal: in a high-interest-rate environment, the market is skeptical of high-risk consumer finance models dependent on high growth and consumer spending, favoring companies that can demonstrate a clear path to profitability.
3.2.3 CoreWeave: AI Infrastructure Resilience
Cloud computing company CoreWeave, focused on AI computing, was priced at $40 but saw its share price spike post-listing. Although it has since pulled back, it remains up approximately 80%, trading at around $72. Despite reporting a net loss of $863 million in 2024, the company’s exceptional market performance proves that capital has an unusual appetite for pure-play AI infrastructure assets. Furthermore, CoreWeave’s strategic capacity agreement with Nvidia (NVDA) helps de-risk future capacity exposure and supports its future growth narrative by providing some degree of guaranteed revenue.
The IPO market in 2025 shows significant sectoral bifurcation: although Technology, Media, and Telecommunications (TMT) accounted for one-third of deals and more than half of proceeds, internal performance has swung to extremes. The success of CoreWeave contrasts sharply with the struggles of Navan and Klarna, meaning capital is highly concentrated in companies with clear generational themes (like AI infrastructure) and is punishing software and fintech models with lower moats or macroeconomic pressures.
4. 2025 Near-Term Pipeline: Companies Navigating the Regulatory Bottleneck
Despite regulatory backlog and the approaching holiday season, a few offerings that have advanced late in the regulatory process are still planning to list in November and December 2025.
4.1 Medline (Medical Supplies)
Medline is a major medical supplies company, expected to be a key non-tech component of the near-term pipeline. Wall Street anticipates Medline could list in December, potentially raising up to $5 billion. A successful large listing in healthcare is crucial to demonstrating the stability and breadth of the IPO market, proving investor demand is not limited to AI and TMT sectors. Necessities industries like medical supplies are less sensitive to macro swings or Fed policy, making them reliable candidates for the narrow Q4 window.
4.2 BitGo (Cryptocurrency Technology)
BitGo is a cryptocurrency technology company focused on digital asset custody and infrastructure. The company remains a potential candidate for a November or December 2025 listing. BitGo’s listing will test the sustained institutional demand for crypto and blockchain infrastructure amid the ongoing regulatory uncertainty.
5. 2026 Spillover Effect: High-Profile Listings Delayed from 2025
The SEC backlog and unfavorable market conditions have caused several high-profile companies to explicitly delay their listing plans, pushing market recovery hopes into the first half of 2026.
5.1 Chime (Fintech)
Chime, a prominent neobank/fintech company providing mobile-first banking services, has reached significant scale. The company had planned an IPO in 2025 but has delayed its timeline. Its estimated valuation is approximately $25 billion. Chime's delay, coupled with Klarna's poor post-listing performance, reflects the structural challenges facing unproven, unprofitable consumer fintech companies that rely on strong consumer spending and a favorable regulatory environment.
5.2 Once Upon a Farm (Consumer Food)
Once Upon a Farm produces chilled baby and children's food, sold through major retailers (such as Whole Foods, Walmart) and D2C channels. Although the company reported sales revenue in 2024 reaching $156.8 million (up from $94.3 million in 2023) and continues to grow, its net loss expanded to $28.5 million in the first half of 2025.
Company CEO Frank Foraker confirmed the planned holiday-window IPO would be postponed until 2026. This reflects a strategic delay based on the company's fundamentals: the company chose to utilize the "found time" to continue innovating and building the brand rather than list at a discounted valuation when the market is punishing unprofitable growth. This confirms that the current cautious investor sentiment is directly influencing corporate IPO strategy, viewing the IPO as a tool for raising disciplined capital, not merely a means of validating private market valuations.
6. New Horizons: Anchor IPO Candidates for 2026
2026 is shaping up to be an exceptionally competitive year for IPOs, anchored by several highly anticipated mega-deals primarily focused on high-growth, AI-related technology. These candidates are distinct from those delayed due to the late-2025 market cool-down.
Table 2: Potential Major IPO Candidates for 2026 and Beyond
| Company Name | Industry/Description | Estimated Valuation/Proceeds | Expected Timeline | Key Considerations | Source |
|---|---|---|---|---|---|
| Databricks | AI/Data Analytics Platform | Valuation over $100 billion | 2026 | AI area leader, annual revenue over $4 billion, >50% growth rate. | |
| Canva | Graphic Design/SaaS | Valuation $42 billion | 2026 | Valuation confirmed by employee share sale, strong demand. | |
| Plaid | Fintech Infrastructure | Last valuation $6.1 billion | 2026 | Key connection layer for the fintech ecosystem. |
6.1 Databricks (AI and Data Analytics Giant)
Databricks is a leader in the AI and data analytics space, offering a unified platform for data engineering, machine learning, and data science. The company boasts a valuation exceeding $100 billion, with annual revenue over $4 billion and year-over-year growth exceeding 50%. Its listing is expected to attract significant interest as investors look to align with companies leading transformative AI technology. This will be the biggest test of AI valuation acceptance in 2026.
6.2 Canva (SaaS and Creative Design)
Canva is a globally successful graphic design platform. It recently confirmed a $42 billion valuation through an employee share sale, a process widely seen as a key prelude to its anticipated 2026 IPO. The round was oversubscribed, reflecting strong underlying investor demand. Despite public market volatility, Canva's successful private valuation event signals deep institutional confidence in its business model and revenue durability, setting a positive anchor for 2026.
6.3 Plaid (Fintech Infrastructure)
Plaid is the core technology layer in fintech, securely connecting consumer bank accounts to thousands of financial applications. Its last funding round was valued at $6.1 billion, and Wall Street views it as a key IPO candidate for 2026. Plaid’s success is closely tied to the overall health and regulatory stability of the U.S. fintech ecosystem.
The Risk of a 2026 “Clash of Big Deals”
With Databricks ($100B+), Canva ($42B), Chime ($25B), and numerous deals delayed from 2025 all targeting Q1 or Q2 2026, the market faces a potential "clash of big deals" risk. While large funds and money managers hold "excess cash", the market's capacity to absorb multiple mega-deals in a short period is limited. This density could lead to valuation compression or market fatigue, especially if the macroeconomic backdrop (such as high interest rates and inflation) remains restrictive. Only companies that are well-prepared, flexible, and ready to execute decisively will stand out in the 2026 competition.
7. Assessment of IPO Demand Dynamics: Institutional Strength vs. Retail Volatility
2025 IPO demand has been selective, but fundamentally strong, characterized by a powerful institutional core and active yet volatile retail participation.
7.1 Institutional Investor Demand: Concentrated Capital
Ample Liquidity: Large mutual funds and money managers hold significant excess cash, indicating there is plenty of capital ready to be deployed.
Structural Support for Quality: Institutional investors showed strong support for large Q3 IPOs. They prioritize companies with strong fundamentals: appropriate scale, profitability or a clear path to it, and operational maturity.
Sectoral Preference: IPO activity has concentrated in the Technology, Media, and Telecommunications (TMT) sector (over half of total proceeds) as well as Healthcare and Industrials.
7.2 Retail Investor Impact and Aftermarket Pricing Tension
Increased Participation: Retail investor trading activity, particularly among Gen Z, has significantly increased in frequency (6%-8% year-over-year growth in daily/weekly trading activity). This high engagement makes retail demand a significant factor in post-IPO price action.
Pricing Conundrum: Issuers face the persistent difficulty of balancing the issue price to appeal both to institutional investors (securing allocation in bookbuilding) and aftermarket retail investors (driving post-listing demand). Phenomena like Figma’s 250% first-day surge prove that to ensure successful institutional subscription, companies are often compelled to underprice the offering, thereby leaving substantial money on the table. Subsequent retail "Fear of Missing Out" (FOMO) drives prices higher, resulting in massive pops, followed by institutional sell-offs.
The rapid post-listing decline of high-profile stocks (like Figma, Klarna, Navan) strongly confirms that institutional investors are selling into the retail-driven spikes. Institutions are exercising capital discipline, focusing on long-term value, and realizing profits when market prices extend beyond their fundamental valuation models. This suggests a normalization of the market away from the irrational exuberance of 2020–2021.
8. Strategic Recommendations for Retail Investors
In the current market, marked by regulatory uncertainty, valuation scrutiny, and high post-listing volatility, retail investors must adopt disciplined, long-term strategies for engaging with IPO investments.
8.1 Prioritize Fundamentals and Profitability Over Growth Hype
The core task for investors is to conduct due diligence, focusing on core financial metrics—scale, growth prospects, and a clear path to profitability. Ignore "vanity metrics" such as high revenue growth that accompanies significant loss expansion (e.g., Once Upon a Farm). Institutional investors are rewarding disciplined companies, and retail investors must follow suit. Investing in quality infrastructure (like CoreWeave, benefiting from the AI theme) or essential services (like Medline) offers better insulation from volatility than high-risk consumer growth stories (like Klarna or Navan).
8.2 Be Extremely Cautious of First-Day Price Spikes
Investors should avoid buying immediately after sharp first-day spikes (such as Figma’s triple-digit surge). Instead, wait for the market to normalize and for institutional selling pressure to subside. Data shows that the initial pricing is often artificially suppressed to ensure successful institutional order book clearing, creating the "listing pop". As seen with Figma and Navan, this surge is often unsustainable, leading to subsequent aftermarket decline. Patience is key to gaining a better entry point that reflects the stock’s true intrinsic value, rather than being driven by temporary retail fervor.
8.3 Understand Price Discovery and Avoid Speculative Indicators
Investors should focus on understanding the price discovery mechanism in the pre-open session, which determines the listing price based on actual buy and sell orders collected by the exchange. Rely less on unofficial or speculative indicators (like Grey Market Premium, GMP). The opening price is transparently determined by the exchange using the volume-weighted average of limit orders. Investors who understand that the listing price reflects "real demand" placed during the pre-open window will make more informed decisions than those guided by unofficial speculation.
8.4 Prepare for the High-Quality 2026 Pipeline
Retail investors should use the extra time provided by the 2025 delays to conduct thorough due diligence on the potential 2026 mega-deals (Databricks, Canva, Plaid). The companies slated for 2026 are characterized by high quality and scale, offering superior long-term investment opportunities. By focusing on established market leaders, investors can mitigate the risks associated with unproven business models.
Sources
- U.S. Securities and Exchange Commission (SEC). (Nov 13, 2025). Division of Corporation Finance Guidance Following the Government Shutdown. Retrieved from https://www.sec.gov/newsroom/whats-new/division-corporation-finance-guidance-after-government-shutdown
- Medline. (n.d.). About Us. Retrieved from https://www.medline.com/
- Once Upon a Farm. (n.d.). Clean Baby Food & Kids' Snacks. Retrieved from https://onceuponafarmorganics.com/
- Canva. (n.d.). Digital design. Retrieved from https://www.canva.com/
- Plaid. (n.d.). Turn data into revolutionary financial products. Retrieved from https://plaid.com/