A low-interest-rate environment and bullish market sentiment have increased initial public offerings over the past two years. Investor enthusiasm for IPOs has helped recently-listed stocks Robinhood (NASDAQ:HOOD), SentinelOne (S), Full Truck (YMM), and Traeger (COOK) soar significantly. However, considering their limited growth prospects, these IPO stocks look significantly overvalued at their current price levels. So, they are best avoided now.Last year was a great year for IPOs thanks to a low-interest-rate environment and the quick and low-cost listing options such as special purpose acquisition companies (SPACs). In total, 480 companies went public last year. The number has been even higher so far this year. According to Stock Analysis, there have been 742 IPOs so far this year.
However, the Federal Reserve could raise interest rates as early as 2023, and recently indicated its willingness to reduce asset purchases before the end of the year. In addition, Investors’ concerns over the economic recovery due to the resurgence of COVID-19 cases and high inflation could pose a threat to many recently listed stocks.
Investor optimism over recently-listed stocks Robinhood Markets , Inc. (HOOD), SentinelOne, Inc. (S), Full Truck Alliance Co. Ltd. (YMM), and Traeger, Inc. (COOK) has helped them reach price levels that don’t justify their recent financial performance and growth prospects. So, these stocks are best avoided now.