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Beware of These 4 Recent IPOs That Have Plunged More Than 40% Since Listing

Stock MarketsDec 07, 2021 01:31PM ET
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© Reuters. Beware of These 4 Recent IPOs That Have Plunged More Than 40% Since Listing

The exit value for U.S. public-market listings recently rose to a record high. However, with analysts expecting a market correction soon, many recent IPOs that are not backed by solid fundamentals could witness significant declines in their share prices. Thus, we think it might be best to avoid recently listed stocks DiDi Global (DIDI), Toast, Inc. (TOST), Full Truck Alliance (YMM), and Marqeta (MQ), which have already plunged more than 40% in price since being listed. Let’s discuss.The total exit value of United States’ public listings surpassed$1 trillion after the automotive company Rivian Automotive Inc. (RIVN) went public in November. The figure, while emphasizing the market’s warm reception for recent initial public offerings (IPOs) and other new entrants, also underscores concerns about the disconnect between the valuations and fundamentals of these companies, which lack historical data.

Market bull Jim Paulsen of the investment management firm Leuthold Group has predicted a 10% to 15% market correction due to high valuations and federal policies becoming less accommodating. In addition, smaller companies are bearing the brunt of the recent market swings.

Given this scenario, we think it might be best to avoid the recent IPOs of companies with weak fundamentals, such as DiDi Global Inc. (DIDI), Toast, Inc. (TOST), Full Truck Alliance Co. Ltd. (YMM), and Marqeta, Inc. (MQ). These stocks have plunged more than 40% in price since listing. Furthermore, DIDI plans to withdraw from the New York Stock Exchange due to Chinese regulatory pressure.

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Beware of These 4 Recent IPOs That Have Plunged More Than 40% Since Listing
 

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