How do IPO's Really Work?

When investors hear the words "initial public offering,” it’s easy to imagine they are buying a piece of a dream.

Consider the most celebrated IPO in recent history, which started trading in early June. Some assumed that when this aerospace company went public, they would feel like they were participating in a mission to Mars.

But IPOs don't work that way.

When a company goes public, the proceeds rarely go toward the bold mission that made the company famous. More often, the money satisfies early investors, pays down debt, or funds day-to-day operations. The romantic story and the financial mechanics can be two very different things.

Getting part of the action before trading begins is almost exclusively reserved for large institutional investors. Buying once the stock starts trading is open to anyone. But the stock price can swing dramatically, especially in the first few days of trading as the market finds its footing.

So IPOs can be more complex than the headlines suggest, which is important to understand because two high-profile AI companies are expected to go public in the months ahead.

One of the AI companies reached 100 million users faster than any application in history, and the other is backed by two of the largest technology companies in the world. Both are expected to have their IPO sometime in the autumn, so prepare to see some loud headlines.

So far in 2026, IPOs have raised the most money since 2021. Be ready for a record year if the two AI companies go public as expected.

More than likely, if you have a diversified portfolio, one or more of your investments may end up owning shares in these companies. In fact, certain investments are required to purchase newly listed companies because their investment objective is to mirror the stock market or a particular index. So you may end up being an owner.

Please reach out if you have any questions about the IPO market. It will be fun to hear your perspective on space, AI trends, and whether you’ve booked your ticket to Mars.

_{SEC.gov, 2026}

_{RenaissanceCapital.com, 2026. “2026 IPO Market Stats”}