The value of IPOs in the first half of this year surpassed mid-pandemic levels. However, since the Fed intends to start tightening its monetary policy later this month and inflation is rising, many recently listed stocks could suffer. Hence, we think it might be best to avoid the recent IPO stocks Amplitude (AMPL), Dutch Bros (BROS), and Tyra Biosciences (TYRA), which look overvalued at their current price levels. Let’s discuss.For the first half of this year, initial public offerings (IPOs) hit record highs, totaling $171 billion and surpassing the IPO boom of 2020. A loose monetary policy primarily drove the boom. However, a speculative rush by investors drove corporate valuations significantly higher. And the IPO trend is not expected to slow anytime soon. Frontier markets investment bank Renaissance Capital anticipates the year will end with 400 traditional IPOs and 600 SPACs.
However, investing in IPOs can be risky due to a lack of historical data on some companies listing the stock for the first time. Also, the Fed intends to reduce its monthly bond purchases later this month, marking its first step in pulling back its monetary support efforts. The central bank’s bond-buying is expected to decline by $15 billion each month. In addition, supply chain worries persist, driving high and persistent inflation concerns. These factors could adversely impact the performance of many recently listed stocks.
Recently listed stocks Amplitude, Inc. (AMPL), Dutch Bros Inc. (BROS), and Tyra Biosciences, Inc. (TYRA) look overvalued at their current price levels. So, we think it could be wise to avoid these stocks now.