Are IPOs Still Buying Opportunities? Ed Elson on the State of IPOs and that Big, Beautiful Bill
In this episode of Money Rehab with Nicole Lapin, host Nicole Lapin and guest Ed Elson examine the current state of Initial Public Offerings (IPOs) and their impact on retail investors. They analyze recent high-profile IPOs that haven't met expectations and discuss how the practice of underpricing IPOs tends to benefit insiders and institutions rather than individual investors.
The conversation explores how successful companies now stay private longer, affecting wealth-building opportunities for average investors. Elson and Lapin examine how this trend, combined with current economic conditions, creates unique challenges for younger generations. They discuss how factors such as high stock market valuations, rising housing costs, and increasing college expenses impact the ability of young investors to build wealth compared to previous generations.
This is a preview of the Shortform summary of the Jul 7, 2025 episode of the Money Rehab with Nicole Lapin
Sign up for Shortform to access the whole episode summary along with additional materials like counterarguments and context.
1-Page Summary
IPO Market Overview: Recent High-Profile Listings
Nicole Lapin and Ed Elson discuss concerns about recent high-profile IPOs, highlighting that many haven't met investor expectations. Companies like Circle, Coreweave, and Chime face significant business challenges post-listing. Elson suggests that many IPOs are deliberately underpriced to create hype, benefiting insiders and institutions rather than supporting sustainable growth.
While Lapin shares success stories of retail investors profiting from early IPO entry, Elson points out that regular investors often receive minimal opportunities compared to institutional investors. He uses Airbnb as an example, where insiders bought at $60 before the surge, while retail investors faced higher entry prices.
Impact of Longer Private Status on Retail Investors
The trend of successful companies staying private longer is significantly affecting retail investors' opportunities. Elson notes that transformative companies like OpenAI, ByteDance, and SpaceX are choosing to raise funds through venture capital instead of going public. Unlike past tech giants such as Apple and Microsoft, today's companies often reach massive valuations while private, with OpenAI reportedly valued at $300 billion before any public offering.
Lapin and Elson discuss how this privatization of wealth creation, combined with accredited investor requirements, restricts average retail investors from participating in early-stage investments, thereby widening the wealth gap.
Government Policies and Economic Factors in Young Investors' Wealth-Building Opportunities
Elson expresses serious concerns about recent legislation that could add three to five trillion dollars to the deficit over the next decade. He argues that this bill, along with tax cuts for the wealthy, effectively shifts the debt burden onto younger generations.
The economic landscape presents unprecedented challenges for young investors, according to Elson. He points out that unlike previous generations who enjoyed more favorable conditions, today's young investors face high stock market valuations and housing costs that far exceed traditional income ratios. The average age of homeowners has risen to 50, while college costs have increased from 13% to 42% of annual income, creating significant barriers to wealth accumulation for younger generations.
1-Page Summary
Additional Materials
Clarifications
- Accredited investor requirements are criteria set by financial regulations to determine who can participate in certain investment opportunities. These requirements typically target individuals or entities with higher financial thresholds, allowing them access to more complex and riskier investments. Accredited investors often include high-net-worth individuals, financial institutions, and large corporations. These regulations aim to protect less experienced investors from high-risk investments by limiting access based on financial sophistication and capability.
- When an IPO is underpriced, it means the shares are sold to investors at a lower price than what the market values them at. This can create a buzz around the IPO, attracting more investors. However, it can also mean that the company may not raise as much capital as it could have if the shares were priced higher. Underpricing can benefit insiders and institutions who get in at a lower price, potentially leading to missed opportunities for retail investors.
- The impact of longer private status on retail investors relates to how successful companies are choosing to stay private for extended periods before going public. This trend limits retail investors' access to investing in these companies during their early growth stages, potentially missing out on significant investment opportunities. It also contributes to widening the wealth gap as accredited investors and institutions often benefit more from these private investments. This shift in company behavior affects how retail investors can participate in wealth creation and early-stage investments.
- OpenAI, ByteDance, and SpaceX have opted to raise funds through venture capital instead of conducting an initial public offering (IPO). This decision allows these companies to maintain more control over their operations and avoid the regulatory requirements and scrutiny that come with being a publicly traded company. By staying private longer and relying on venture capital, these companies can focus on long-term growth strategies without the pressure of quarterly earnings reports and public market expectations. Additionally, this approach enables them to attract strategic investors who can provide not just capital but also expertise and connections to help the companies expand and innovate.
- The average age of homeowners rising to 50 means that, on average, individuals are becoming homeowners at a later stage in life compared to previous generations. This trend suggests that younger generations are facing challenges in achieving homeownership due to factors like high housing costs, stagnant wages, and financial constraints. As a result, people are delaying the milestone of owning a home until they are older, impacting traditional patterns of wealth accumulation and financial stability.
Counterarguments
- IPOs are complex financial events, and not all companies can be expected to meet investor expectations immediately post-listing.
- Some companies may face business challenges after going public, but this is not unique to recent IPOs and can be part of the normal business cycle.
- While some IPOs may be underpriced to create hype, others are priced based on thorough assessments by underwriters and may still not perform as expected due to market conditions.
- Retail investors do have opportunities to invest in IPOs, though these may be more limited compared to institutional investors; however, this is partly due to regulations designed to protect less experienced investors from high-risk investments.
- The trend of companies staying private longer can be seen as a way for them to develop more robust business models and avoid the short-term pressures of public markets.
- While retail investors may miss out on early-stage investments in private companies, they can still invest in venture capital funds or ETFs that include private equity.
- The valuation of private companies like OpenAI is speculative and not necessarily indicative of their actual market value if they were to go public.
- Accredited investor requirements are designed to protect individuals from high-risk investments, though they can be seen as restrictive.
- Legislation that adds to the deficit is often complex and may include investments that could benefit the economy and future generations in the long term.
- Tax cuts can have various effects on the economy, and some argue that they can stimulate growth and eventually benefit all socio-economic classes.
- While young investors face challenges, they also have access to a wider array of investment tools and information than previous generations.
- The rise in the average age of homeownership can be attributed to various factors, including changing lifestyle choices and longer life expectancies.
- The increase in college costs is a significant issue, but there are also more options for higher education funding, scholarships, and alternative education paths than in the past.
Get access to the context and additional materials
Ipo Market Overview: Recent High-Profile Listings
The IPO market is buzzing with activity, but Nicole Lapin and Ed Elson express concerns about the actual value and long-term sustainability of recent high-profile listings.
Recent Ipos Have Not Met Investor Expectations
Recent IPOs have not lived up to the hype, stirring debate over their value creation and prospects.
Many 2025 Ipos, Like Circle, Coreweave, and Chime, Face Business Issues or Uncertain Long-Term Value Creation Paths
Nicole Lapin and Ed Elson note 2025 as a significant year for IPOs, with high expectations. Companies like Circle, Coreweave, and Chime have faced issues post-listing. Circle, largely dependent on the stability of US treasuries, is not seen as an exciting prospect. Coreweave, an AI company tied to Nvidia, might struggle as a standalone company. Similarly, Klarna is dealing with rising losses due to defaults, mirroring concerns of traditional credit card companies.
Perception: Ipos Underpriced For Hype and Insider Gains, Not Sustainable Growth
The hosts are skeptical about the long-term value of recent IPOs. Elson questions whether offerings meet the high standards of tech giants like Google and Apple. He suggests that IPOs might be underpriced to create a buzz, which benefits insiders and institutions. Post-IPO, stocks like Airbnb dropped from their initial price, highlighting that gains may be based more on hype than sustainable growth.
Retail Investors Can Profit From Ipos, but Face Challenges
Retail investors have a place in the IPO market, but they're up against various hurdles and disproportionate gains.
Early Ipo Entry Yields Gains for Retail Investors, as Shown by Coreweave and Reddit
Lapin shares her achievements with IPO investments, such as CoreWeave and Reddit, attributing her gains to early entry. However, Elson points out that while insiders often benefit from substantial short-term profits, regular investors seem to receive the "scraps" after institutional allocations.
Insiders See Astronomical Growth ...
Here’s what you’ll find in our full summary
Ipo Market Overview: Recent High-Profile Listings
Additional Materials
Clarifications
- Recent high-profile IPOs have raised concerns due to not meeting investor expectations, leading to debates about their actual value and long-term sustainability. Companies like Circle, Coreweave, and Chime have faced business issues or uncertainties post-listing, impacting investor confidence in their future growth potential. The perception exists that some IPOs may have been underpriced initially to generate hype and benefit insiders, rather than reflecting sustainable growth prospects. This has led to skepticism about the long-term value and performance of recent high-profile IPOs compared to established tech giants like Google and Apple.
- When IPOs are underpriced for hype and insider gains, it means that the initial offering price of the stock may be set lower than its actual value to generate excitement and ensure a strong market debut. This strategy can benefit insiders and institutional investors who receive shares at a lower price, potentially leading to quick profits when the stock price rises post-IPO. Retail investors, on the other hand, may face challenges as they often enter the market later and may not receive the same advantageous pricing as insiders.
- Retail investors in the IPO market face challenges such as limited access to shares at the offering price, which is often reserved for institutional investors. They may also encounter higher entrance prices when they can finally buy shares post-IPO, potentially leading to lower returns. Additionally, retail investors may lack the same level of information and insight as insiders, putting them at a disadvantage in making investment decisions. Overall, navigating the IPO market as a retail investor requires careful consideration and understanding of the dynamics at play to achieve success.
- Insiders in IPOs, like company executives or early investors, often receive preferential treatment in terms of share allocation and pricing, allowing them to potentially profit significantly from the initial trading of the stock. Regular investors, including retail investors, typically have limi ...
Counterarguments
- IPO performance can vary widely, and some recent IPOs may have met or exceeded investor expectations, which is not captured in the generalization presented.
- Business issues post-IPO can be part of the natural growing pains of a company transitioning from private to public, and do not necessarily indicate a lack of long-term value creation.
- Underpricing IPOs can be a strategic move to ensure a successful launch and can benefit all investors if the stock price appreciates over time.
- Retail investors have access to more information and tools than ever before, potentially leveling the playing field with institutional investors.
- The success of retail investors in IPOs, such as with Coreweave and Reddit, demonstrates that opportunities for substantial gains are not exclusively available to insiders.
- Insiders are subject to lock-up periods and ...
Related Shortform Content
Get access to the context and additional materials
Impact of Longer Private Status on Retail Investors
The conversation with Ed Elson and Nicole Lapin centers on how the growing trend of companies staying private longer affects ordinary investors and widens the wealth gap.
Fewer High-Quality Companies Are Going Public
Elson argues that many valuable companies are opting to stay private longer, thus denying retail investors a chance to invest.
Successful Companies Like Openai, Bytedance, and Spacex Stay Private, Raising Funds From Venture Capital and Denying Retail Investors Opportunities
He expresses his desire to invest in high-quality, transformative companies like Stripe, OpenAI, ByteDance, and SpaceX. These companies have not gone public, instead raising funds through venture capital, limiting opportunities for retail investors like him to participate in their growth.
Trend Restricts Retail Investors' Options For Building Long-Term Wealth Through Transformative Companies
The trend of successful companies like OpenAI and ByteDance staying private and resorting to venture capital excludes regular investors from the investing process. This trend restricts the options retail investors have when seeking long-term wealth through transformative companies.
Privatizing Wealth Creation Disadvantages Younger Generations
The privatization of wealth creation, as Lapin points out, may leave loopholes for retail investors through secondary platforms. However, Elson criticizes the legal framework, which requires individuals to be accredited investors to participate in these private investments, arguing that this unfairly excludes average retail investors.
Private Funding Drives Most Company Growth Before Public Investment
Elson notes that companies now reach high valuations like OpenAI's reported $300 billion while still private, meaning most growth takes place before the public can invest, which ...
Here’s what you’ll find in our full summary
Impact of Longer Private Status on Retail Investors
Additional Materials
Counterarguments
- Companies may stay private longer to avoid the regulatory burdens and short-term performance pressures of public markets, which can be beneficial for their long-term strategy and innovation.
- Retail investors can indirectly invest in private companies through public mutual funds, ETFs, or pension funds that invest in private equity.
- The rise of crowdfunding platforms and changes in regulations may increase access for non-accredited investors to invest in private companies.
- Staying private allows companies to focus on long-term goals without the quarterly earnings pressures from public investors, potentially leading to more sustainable businesses.
- The wealth gap issue is complex and not solely caused by investment opportunities in private companies; addressing it may require broader economic and policy changes.
- Some argue that the accredited investor regulations protect less experience ...
Actionables
- You can explore equity crowdfunding platforms to invest in private companies. These platforms allow non-accredited investors to buy shares in startups and private businesses. For example, websites like SeedInvest or StartEngine enable you to browse various startups and invest with as little as a few hundred dollars, giving you a chance to participate in early-stage company growth.
- Consider joining investment clubs where members pool their resources to invest in opportunities typically reserved for accredited investors. By collaborating with a group, you can collectively meet the criteria for accredited investments or negotiate with private companies for investment opportunities. This approach not only democratizes access to private investments but also allows for shared learning and risk management among club members.
- Engage with local startup ecosystems by attend ...
Get access to the context and additional materials
Government Policies and Economic Factors in Young Investors' Wealth-Building Opportunities
Ed Elson voices deep concerns regarding the economic future of young investors in light of recent government policies and the challenging economic climate.
"Big, Beautiful Bill" Concern for Young Investors
Bill to Increase Deficit, Raising Interest Payments and Cutting Programs for Younger Generations
Elson expresses unease over the "big beautiful bill," which he implies could have long-term negative implications for younger generations. He indicates that the legislation will add three to five trillion dollars in deficits over the next decade, resulting in increased national debt service, expected to grow significantly by 2034. This situation, exacerbated by tax cuts for the wealthy, shifts the debt repayment burden onto the younger population, making them subsidize the lifestyles of older generations.
Policy Shifts Wealth From Young To Old, Hindering Financial Security
Elson criticizes the same bill, pointing out that its impacts will include a wealth shift from the young to the older population, thereby hindering the financial security of younger generations. He warns of the immediate adverse effects on poorer individuals through the cutting of Medicaid and SNAP benefits, along with long-term challenges posed by sustained fiscal policies that neglect to balance spending with adequate revenue, essentially passing the deficit to the young.
Economic Conditions Are Increasingly Challenging For Young Investors
Challenges in Wealth Accumulation for Younger Generations
The economic landscape presents formidable barriers to wealth accumulation for the younger generations today, Elson remarks. He contrasts the present situation with that of previous generations, noting high stock market va ...
Here’s what you’ll find in our full summary
Government Policies and Economic Factors in Young Investors' Wealth-Building Opportunities
Additional Materials
Counterarguments
- The deficit increase due to the "big beautiful bill" might be offset by economic growth or increased efficiency in government spending.
- The wealth shift from young to old could be mitigated by other policies aimed at supporting younger generations, such as education subsidies or job training programs.
- High stock market valuations and housing costs could also present opportunities for young investors who are able to enter the market, potentially leading to greater wealth accumulation in the long run.
- The comparison with previous generations may not account for changes in technology, globalization, and new industries that offer different paths to wealth accumulation for young people.
- The statistic about the average age of homeowners and young adults living with their parents could reflect cultural shifts or personal choices rather than purely economic conditions.
- The rise in college costs might be counterbal ...
Actionables
- You can diversify your investment portfolio by exploring alternative assets like peer-to-peer lending, crowdfunding real estate, or investing in startups. Since traditional markets like stocks and housing are less accessible, looking into emerging platforms that allow for smaller investments can help you grow your wealth. For example, using a platform that facilitates micro-investments in local businesses or real estate projects can offer returns and help you learn about new investment opportunities.
- Start a side hustle that aligns with your skills or hobbies to create an additional income stream. With the rise in living costs and challenges in wealth accumulation, having an extra source of income can provide financial cushioning and savings potential. This could be anything from freelance writing, graphic design, or selling handmade goods online, which can be started with minimal upfront costs.
- Engage in financial l ...
Get access to the context and additional materials
Create Summaries for anything on the web
Download the Shortform Chrome extension for your browser
