Motley Fool Hidden Gems Investing - The 2025 IPO Comeback Tour

Episode Date: December 16, 2025

In today’s episode of Motley Fool Money, Emily Flippen is joined by Sanmeet Deo and Jason Hall to break down why the IPO market took off in 2025, which new listings may look like future Rule Breakers, and what investors should be keeping an eye on for new IPOs in 2026: - Why the IPO market heated up in 2025 and what it means for the future performance of newly listed companies - What separates true Rule Breaker contenders from fakers when listing on public markets - What the 2026 IPO market has in store, and if it ever makes sense to buy on day one Companies discussed: CRWV, FIG, KLAR, CRCL, SPCE, CHYM, SpaceX Host: Emily Flippen, Jason Hall, Sanmeet Deo Producer: Anand Chokkavelu Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

The IPO market woke up in 2025, but can it continue its run in 2026? And is SpaceX the exception or does it really never make sense to buy into an IPO? We're discussing all of this and more today on Motley Fool Money. Today is Tuesday, December 16th. Welcome to Motley Fool Money. I'm your host, Emily Flippen. And today I'm joined by Fool analyst, Jason Hall and Samit Deo to discuss the IPO market. We'll be taking a look back at what reopened the IPO window over the course of the past year, run the biggest IPOs of 2025 through a rule breaker's lens, and make a few predictions for the 2026 IPO markets, including discussing if it really never makes sense to buy into an IPO. Now, the IPO market in 2025 was obviously much

hotter than 2024. The third quarter of this year was the biggest quarter for capital raises since 2021, and IPOs in the first half of this year were up more than 75% compared to 2024. Now, I know we're not still in that post-pandemic world of IPO mania that we had just a few years ago, but the falling interest rates, a surprisingly resilient market, it seems all have whetted the appetite of banks, companies, and investors alike. So, Jason, I want to pass it to you first. When you think about the IPO market and the performance of it this year, what do you think was the main catalyst? What's the simplest explanation for why we're seeing so much more demand today than we were a year ago. So I think the shorter answer is bull markets beget more IPOs. And as much as

it's been kind of a weird, uncertain year in some ways for things that affect the economy and companies, like a trade war in tariffs, the economy's just powered through. I think that's a big part of the story. But a little bit more nuanced answer is the market and economy have continued to do well. And interest rates are falling. And we're moving farther away from the 2022 bear market, where we saw so many of those IPOs and SPACs from 2020 and 2021 that just absolutely crashed and burned. And they say that time heals all wounds. And I think that's true in public markets too. So I think the combination of falling rates, generally good stock return since late 2022, and relatively rich valuations, we're here at all-time highs. They've certainly

made it more favorable to go public. But guys, there's one more factor that we really need to consider. We're not going to talk politics or be partisan here, but the presidential election happened a year ago. I went back and looked at IPO data for the years before of and the year after a presidential election, going back 20 years to the 2004 election. What I found was interesting is that in general, IPOs tend to fall or be somewhere in the area of where they were the year before the election, but in the year after the election, it almost always is higher. So it does kind of tell me that all things created equal, it does seem that the uncertainty of a presidential election and maybe a change in who's going to be calling the shots does weigh on IPOs

to some extent. Now, of course, the big caveat is that significant macro factors still play a bigger role. From 2003 to 2004, 2003, the market finally stopped falling, started moving back up. And then 2004, there was a presidential election, but we were finally removed from the dot-com crash enough that we saw a big increase in IPOs that year. Now, another strange one was 2020. Well, that was a presidential election year, but it was weird in every possible way. And IPOs absolutely skyrocketed that year. So again, all things equal, outside of those outlier things, we do get a little bit more uncertainty the year of presidential elections. It seems like the following years, when there's more certainty in the markets, we do see more companies go public.

Yeah, I didn't make that connection, Jason, but it does make a lot of sense. I mean, the market does hate uncertainty. And why would companies like uncertainty any more than the market does? For the people listening who are members of The Motley Fool's Epic Service and our podcast that we taped yesterday, our Epic Roundtable podcast, one of the things that I mentioned was with falling interest rates, I think that the level of uncertainty associated with economic data, whether that be jobs reports or inflation reports, and the lack of trustworthiness that's been cultivated around these reports of data, it's probably going to lead to a lot more variability in market returns simply because of the uncertainty around the market. So it is

interesting to make that connection there. But something that stood out to me outside of the uncertainty that Jason mentioned, the election year, all that stuff, was that the market seemed kind of selective, I guess, about the IPOs that it chose to reward and punish. And of course, sticking with the theme of the year, it seemed like the AI-based IPOs just attracted a lot more attention and capital. When you reflect on the IPO market this year, do you think that was what was leading demand for IPOs outside of the election and stuff? But just AI, or was it everything else that Jason mentioned? And then taking that one step further, if the AI bubble burst in 2026, does that mean that the IPO market set up for failure? Yeah, you know, demand for AI

capital was a substantial share of the total $38 billion of IPO proceeds raised. If you look at that $38 billion that was raised this year, about 43% of it, $16.5 billion was AI-related. But it was very specific. Public investors bought the infrastructure, like Coruiz, $1.5 billion listing, software applications like Figma. The actual model builders, they stayed private, raising nearly double what the entire IPO market did, just without the ticker symbols. So while AI was a big portion of the IPOs that did come out onto the public markets, there's still a lot of money going to AI in the private markets that public investors don't even have access to.

Now, if the AI bubble bursts in 2026, I definitely think the IPO market is set up, maybe not for failure, but I think the spigot of the IPO market will tighten and we'll start to see a little less IPOs out there because let's be honest, AI demand is what's driving so much of the markets right now. Yeah. It'll be so interesting to see what happens with that in 2026 because there are, to your point, while a lot of big AI driven companies raising a lot of capital in public markets, to your point, there's a lot more private companies that don't need to go to public markets to get capital. Everybody is throwing money at them hand over fist. And why would you raise additional equity when you can raise additional capital without having to

put yourself through the process that is enlisting and going through an IPO. So it'll be interesting to see if and when that AI bubble bursts, so to speak, if that happens on the private side, which forces these companies, which are unprofitable, to start trying to raise equity from the public, or if the appetite across the board dries up so much that even if they try to go get an IPO, that there isn't the appetite for it from public investors or institutional investors. I tend to lean on your side, Sami, which I think 2026 is set up for a maybe more challenging year than 2025, but that dynamic will be really interesting to watch. Up next, we'll be discussing the most popular IPOs of 2025 and discussing if they have the rule-breaking

characteristics we look for. Stick with us. Stop wasting your nights on a mattress that doesn't get you. Experience the most comfortable mattress in the world, the Sleep Number SmartBed. At the touch of a button, you can personalize your comfort. Choose firmer or softer. Adjust cooler to warmer. And right now, save up to $2,500 during our massive Labor Day event. Hurry into your local Sleep Number store today, because we have your number. Welcome back to Motley Fool Money. IPOs can be a hot commodity, but that doesn't necessarily make them great investments. Of course, that being said, 2025 was a strong year for IPOs, and that seems to have a lot of rule-breaking characteristics for the ones that did particularly

well, including CoreWeave, Figma, and Klarna. Sanmeet, I want to start with CoreWeave, the ticker CRWV for investors who aren't familiar. We talked about the demand for AI-based IPOs earlier in the show, and CoreWeave is kind of the poster child for AI IPO excess. It was priced at $40 when they went public. Shares skyrocketed to over $180 in the following months. A lot of gains have been given back, but of course, shares are still outperforming the market. And when you look at the care characteristics of a rule breaker investment. Um, some of that includes past price appreciation and the perception of overvaluation. So when you look at core weave and the rule breaker framework, is that the most interesting IPO to do this year? Or was there another one

that stuck out? Yeah. So Corey wasn't the most interesting, the most interesting IPO for me this year was Figma. And that's one that I'm digging into, you know, more, but you know, it's already proven to be a rule breaker in its core market of web-based collaborative design. And it has a history of high growth and improving economics. Stock's trading around $17 billion, which is less than the $20 billion Adobe had previously offered to buy it. The company is a top dog, first mover in AI-based collaborative design world with a clear path to monetization. So finally, its founder also owns about 13% of the stock. Not something that's necessarily important in the rule-breaking investing, but nonetheless, it's still appealing. It's been so interesting to watch Figma's rise

to public markets because Adobe, to your points, I mean, offered to buy them. They're trading below that. And I think a lot of investors, myself included, kind of were happy that that deal from Adobe fell through because it was such an expensive price at the time to pay for a company like Figma. But Adobe is getting a lot of skepticism right now around how they're managing artificial intelligence and how that threatens their core design model. But Figma seems to have avoided a lot of that. And I think it goes to show just the strong relationship they have with the artists, creatives, and developers that use their platform. Even enterprise customers, they've developed a strong name for themselves. So, it's certainly one I'm also interested in.

Jason, I mean, like Figma, the ticker is F-I-G, but that obviously was not the only big IPO this year. In addition to Corweave and Figma, some others off the top of my mind include Chime, Klarna, Circle. I mean, they're all disruptors in their own right and also made interesting decisions not to go public prior to this year. But what's IPO stood out for you? I mean, for better or worse. The two outliers to me were Klarna and Circle. Klarna, because it's a 20-year-old company and it's a bank in Europe, so it's been reporting financial results that are publicly available for many, many years. It's not often you get an IPO where you have a ton of data about the company's financial results and balance sheet that you can look at. But the one that actually

stands out the most is Circle because it's so different. Guys, this is a crypto company. Its core business is digital currency, specifically the USDC stablecoin. And over the past year, it's doubled the amount of USDC in circulation of $74 billion. That's a lot. But there's a lot of other things that it's doing in payments and using digital assets in ways that would disrupt the status quo in finance, while at the same time partnering with the status quo like Visa. Get this, guys. It just got conditional approval to be a bank. Yeah, you heard me right. The

Office of the Comptroller of the Currency, the OCC, just gave Circle the green light to start the process of becoming a federally regulated trust bank. What a time to be alive. You guys remember when crypto's biggest selling point was decentralization and not being tethered to the traditional financing banking system. Guys, this is just wild. I mean, that's still part of the thesis. Sometimes you have to play the game. And I give credit to Circle here that I think the winner and the, I don't know what to call it, the stable corn space or the cryptocurrency space, the payments platform, whatever you want to call it, I think you have to operate to an extent within the means that are existent in the world. And maybe at some point they can bring the

disruption. I think they always wanted, but sometimes you have to fight the battle from the inside. Yeah. I just can't help but wonder if, if Shytoshi is no longer with us, because how could this person not have come out against what crypto has become over the past three or four years? Well, one day we'll be paying for pizza with a, with crypto coins. That's probably for sure. Oh, there's a dream heading that way. Yeah. It's heading that way. Up next, we'll be looking forward to 2026 and their IPO markets with a hot one already on the table and discussing if it ever makes sense to buy on day one. This is Motley Fool Money. Welcome back to Motley Fool Money. With 2025 having been a hot year for IPOs,

all eyes are on 2026. Conviction does seem to be high at the moment. We just had news out that SpaceX is recently announcing its own plans to go public either in 2026 or 2027. We don't know the valuation yet, but it's been rumored to be up to one and a half trillion dollars. Oh my gosh, send me when you heard that SpaceX is going public or intends to go public. Did you have any immediate thoughts on if you view it as an opportunity, but also did that make you like more or less optimistic about the IPO market heading into next year? I thought the IPO market is going to the moon. Sorry, bad joke. But you know, SpaceX is, you know, it's an exciting and sexy name, space, rockets. How can that not keep the IPO markets spigot-flowing? But at a proposed

valuation of $1.5 trillion for a cash-burning business, it gets me more worried than excited. If SpaceX does go public, goes into the S&P, you'll have institutional investors stammering to buy it or face career risk. You don't want to be left out. Also, while it keeps the IPO markets humming, it also sucks out the air in the room for smaller issues going public. Now, could you imagine being one of those smaller companies, raising money or going on roadshows at the same time you have SpaceX asking for $1.5 trillion? I mean, that's tough going. Yeah, I didn't think about the downstream impacts that a large IPO has on other companies, but I can certainly think to myself that I would not want to be going public at the same time as SpaceX. The good news, of course,

for institutional investors is that if SpaceX is unprofitable, then at least they won't be eligible to join the S&P 500 unless they start to make an exception on the committee. But we know one thing, right? Elon Musk and his companies, as they did with Tesla, they'll drag out the lack of profits. But the moment they turn that spigot on, institutional investors do run to it. And that's what we saw when Tesla joined the S&P 500. I'm kind of interested in SpaceX. I have always had a fascination with space. I said it on the podcast before. I have lost a lot of money with my Virgin Galactic shares, which I also did, by the way, buy pretty soon after the IPO. Clearly did not work out for me. I mean, Jason, you're the smart one in the room here. You've been outspoken

about why it never makes sense to buy into an IPO. And it's true that there's a lot of challenges with liquidity or whatnot pricing, but outside of just the practicality of it, why are you against the idea of purchasing IPOs on day one? And how long do you normally wait to buy into an idea that you like when they go public? I'm not entirely against it. I'm almost entirely against it. There's always that sliver of, you're telling me that there's a chance, right? I want to answer the last question first. In general, I don't buy IPOs for about a year or two. If I do, it's almost always a very, very small investment. My basic figuring is, if it's a great company, it's still going to be a great company in a year or two. I'll have a lot more

information to decide if it really is a great company or if the stock has just gone up. I also know there's a dirty little secret for a lot of IPOs. And in many cases, they're not a source of new capital for the business. They're an exit strategy for existing investors to sell their shares and the companies don't necessarily get any proceeds. I'm not interested in being somebody else's bag holder. And let's be honest about the state of venture capital. It has become more and more institutionalized. More and more companies stay private longer. They get bigger longer. They don't necessarily need the capital when these big companies go public. And there's just more risk of being that bag holder for a large

institutional investor. Now, there's a more nuanced answer. There was some there. But really, what it gets down to at the core is, if we are talking about a disruptor, a high-growth company going public, a lot of times, we just don't really know if they're scaled up enough to perform well coming out of that nice, warm incubator environment, moving into the cold, hard light of the quarterly demands of Wall Street. We don't know how their management's going to respond. For every Klarna where we have a decade of publicly traded information, there are 75 companies that are unprofitable growth-focused. We just don't know if they're going to sink or swim. That makes sense. I always think about it when I bought my shares of Virgin Galactic,

going back to really my only example for my personal portfolio of buying in pretty quickly after an IPO. I kind of viewed that not necessarily as an investment, but as an expense and a way to track and follow an industry that I was otherwise interested in. There's one more thing I want to add here. And that's so many times when people are buying close to the IPO, they're not using a process or a framework. It's just FOMO versus two things that I think are really important when it comes to buying new companies that have just shown up on public markets. And that's mistake avoidance and regret minimization. Beautifully said. And now we're going to take that wonderful commentary and then explain all the reasons why our logical brains don't always follow that logic,

right? So I mean, are there times, despite Jason's great arguments, that there should be exceptions, times when it makes sense to you personally to buy into an IPO? I mean, absolutely. So much of investing is heavily relying on qualitative and quantitative analysis. But the dirty little secret of great investors is they use a lot of intuition to guide them. I'm not saying to solely rely on intuition, but a healthy dose can really improve investment outcomes. Now, in relation to buying IPOs on day one, if you find a paradigm-shifting company that your gut is telling you, this could be big, and you're willing and realistically going to hold it for decades or longer, why miss the opportunity to even invest a small

allocation of your portfolio? My biggest regret was not buying Google on day one due to overthinking, calls of overvaluation. Would I have really regretted if I just invested even just $500 back then? Now, not all companies are going to be Google, but this is part of the fun of investing. Take a little stake in something that you think could really become something big and you never know, you might surprise yourself. Well, part of that regret minimization can be when you feel a lot of conviction and you figure out how to see the difference between conviction and FOMO, right? Because sometimes going with your gut, you know what guts are full of and it's not good. That's just, you know, we have to remember that. But part of regret

minimization is taking that small stake, like you said, and being disciplined about the way you think about it. Really nicely said guys, as we wrap up today's show, I know I am personally more excited to see what happens in 2026 as it applies to the IPOs and potentially add some of these really interesting 2025 IPOs like Circle or Figma to my own personal portfolio. Jason, Ensign, me, thank you both so much for joining today. As always, people in the program may have interest in the stocks they talked about and The Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows The Motley Fool editorial standards and is not approved by advertisers.

Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Jason Hall, Samit Deo, and the entire Motley Fool Money team, I'm Emily Flippen. We'll see you tomorrow.