Why are startup IPOs risky for retail investors in 2025?

Startup IPOs often have unproven business models and high valuations, making them volatile and prone to underperformance, especially for retail investors chasing hype.

What is a better indicator of IPO success than retail subscription?

Employee subscription rates appear to be a more reliable indicator of a company's internal confidence and potential long-term success compared to public subscription levels.

How can investors avoid losses in Indian IPOs?

Investors should focus on sensible valuations, sustainable business fundamentals, and a company's competitive edge, rather than just listing day gains or grey market premiums.

Home / Business and Economy / IPO Gold Rush: Retail Bets Turn Sour

IPO Gold Rush: Retail Bets Turn Sour

24 Nov

•

Summary

Startup IPOs present extreme risk and reward.
Retail investor enthusiasm often signals poor returns.
Employee subscription is a stronger indicator of success.

The Indian IPO market in 2025 is witnessing a surge in new listings, particularly among startups. These companies, often with untested models and rapid growth, present a high-risk, high-reward scenario for investors. While success stories like Zomato highlight the immense wealth creation potential, a significant number of startup IPOs have underperformed, leading to investor losses. This volatility underscores the challenges of valuing nascent businesses, especially when using traditional metrics.

A striking pattern emerging in 2025 is the inverse correlation between retail investor enthusiasm and post-IPO stock performance. Issues heavily subscribed by retail investors have frequently seen subsequent declines, suggesting their eagerness might be a contrarian indicator. This contrasts with employee subscription, which has shown a more reliable positive correlation with a company's long-term success. This data suggests a need for caution against chasing hype and focusing on deeper fundamental analysis.