Investors who bet on new US stock market listings in 2025 would have seen greater returns by simply putting their money in the S&P 500 index, according to a new analysis. The underperformance of the initial public offering market has been attributed to several factors, with high-profile struggles in the cryptocurrency sector and the volatile performance of some artificial intelligence companies playing a significant role. The year presented a challenging environment for IPOs, marked by a stark divergence between market expectations and actual performance. While the broader S&P 500 index delivered steady gains, the basket of companies that went public largely failed to keep pace. This has led analysts to describe 2025 as a mixed and ultimately disappointing year for new listings. A major drag on the IPO market came from the cryptocurrency industry. Several digital asset and blockchain-related companies that made their public debut faced severe headwinds. These firms entered the market during a period of heightened regulatory scrutiny and shifting investor sentiment toward digital assets. Their subsequent stock performance, often characterized by significant volatility and downward pressure, pulled down the overall average returns for the entire IPO cohort. The sector’s struggle to translate early hype into post-listing stability served as a cautionary tale for investors. Similarly, the artificial intelligence sector, while a dominant theme in markets, contributed to the uneven results. Not all AI companies that went public met the lofty growth expectations priced into their offerings. Some encountered operational hurdles or faced questions about the monetization and scalability of their technology. This resulted in a performance split within the AI category, where a few successes were outweighed by several notable declines, further dampening the overall IPO landscape. The performance gap highlights a shift in investor behavior. In a climate of economic uncertainty and higher interest rates, market participants showed a preference for the relative safety and proven track record of large, established companies within major indices like the S&P 500. This risk-off sentiment made it difficult for newly public companies, regardless of their sector, to attract and sustain the level of investment needed to outperform the broader market. The 2025 IPO experience serves as a reminder that going public is not a guaranteed path to immediate outperformance. It underscores the importance of sustainable business models and realistic valuations, particularly for companies in emerging and volatile sectors like cryptocurrency and artificial intelligence. For investors, the year’s results suggest that broad market exposure sometimes offers a more reliable return than speculating on individual new listings, especially when those listings are concentrated in turbulent industries. Looking ahead, the performance of future IPO classes will likely depend on a more stable macroeconomic environment and a demonstrated ability from listing companies to deliver consistent fundamentals rather than just sector-based narratives.
