Figma Inc. (FIG) made headlines recently with its IPO, pricing at $33 and opening at $115, a 158% increase above the threshold set in its lockup agreement. The IPO allowed insiders to sell early due to a performance-trigger clause, leading to a drastic post-IPO drop to $22 within eight months, highlighting vulnerabilities for retail investors.
Upcoming IPOs from companies like Cerebras Systems Inc. (CBRS), SpaceX, Anthropic, and OpenAI are poised for similar lockup structures, influencing a combined valuation of over $3 trillion. Investors are cautioned to understand these mechanisms to avoid costly pitfalls often unseen until after the IPO frenzy.
As public offerings surge, experts recommend avoiding purchases at the IPO’s opening; instead, they suggest targeting related stocks and supply-chain companies, which present fewer risks associated with early exits by insiders.
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