      onlycfo.io · 2023-09-20
      · 988d
    

Are IPOs Good Investments? Historical Performance of Software IPOs and Retail Investor Returns

The article analyzes whether software IPOs are good investments for different investor types, finding that while pre-IPO and institutional investors benefit significantly, retail investors historically underperform the broader market in the first 6 months post-IPO despite strong long-term returns for successful companies. It examines IPO mechanics, the role of lockup periods and float constraints, and provides empirical data showing 40 of 70 tracked cloud companies fell below day-1 closing prices within 6 months.

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Metrics in this report

6-Month Post-IPO Return

-1%percent

average

Retail investor perspective, 70 cloud companies tracked

IPO First-Day Return (Pop)

38%percent

median

Software IPOs, institutional investor allocation

Klaviyo FCF Margin

24%percent

Company IPO profile, demonstrating profitability at scale

Klaviyo Revenue Growth Rate

51%percent

Company IPO profile, recent SaaS IPO example

Median FCF Margin

2%percent

median

Q1 2020, cloud software companies

Median FCF Margin

13%percent

median

Q1 2023, cloud software companies

Median FCF Margin

-3%percent

median

Q2 2022, cloud software companies

QQQ 6-Month Return

6.6%percent

average

Matched time periods with software IPO cohorts