What should investors reasonably expect from IPO stocks?

Experience from both Vietnam and global markets shows that initial public offering (IPO) stocks rarely deliver immediate gains. However, investors who select companies with solid fundamentals and maintain a long-term holding strategy can be rewarded for their patience.

Across markets, IPO stocks often face short-term price pressure but can offer significant long-term upside, provided the underlying businesses have strong financial foundations and clear growth strategies.

Even global market leaders have experienced difficult beginnings. Meta Platforms, formerly Facebook, is a notable example.

Meta went public on May 18, 2012 at $38 per share, but within four months its stock had plunged more than 50% to a low of $17.5 amid concerns over its business model and ability to monetize mobile users.

As the company later demonstrated success in shifting to mobile advertising and expanding its ecosystem, the stock recovered. Around three years after the IPO, early investors had doubled their money, while those holding until today have seen returns of roughly 15 times, with the share price now near $660.

Robinhood Markets Inc., the U.S.-based online brokerage platform, also illustrates the contrast between short-term volatility and long-term value. Listed on Nasdaq in 2021, Robinhood shares came under heavy selling pressure as the Federal Reserve tightened monetary policy, sending the stock sharply lower after its debut.

As business performance stabilized and markets recovered, the shares gradually rebounded. Investors who held since the IPO have seen the stock rise about fourfold to around $122 per share.

Similar patterns have been observed in Vietnam. BIDV bank saw its shares decline after its 2014 IPO and listing amid weak market conditions and supply pressure from newly issued shares.

Following restructuring efforts, improved efficiency, and steady growth in the banking sector, BIDV was gradually re-rated by the market. Its share price has since risen about 4.5 times from post-IPO levels, delivering strong returns for long-term investors.

Another prominent case is Vietcombank (VCB), which listed on the Ho Chi Minh City Stock Exchange in 2009 when Vietnam’s stock market was in deep decline and the VN-Index had fallen from a peak above 1,100 points to a low of 246.

Despite weak initial performance, Vietcombank’s strong financial position, prudent risk management, and consistent operating results across economic cycles led to a gradual revaluation. Its share price has increased roughly fourfold since the IPO, making it one of the best long-term performers among Vietnamese banks.

A similar story applies to Techcombank (TCB), one of Vietnam’s leading private banks. In April 2018, Techcombank set a record in the domestic banking sector by selling 164.1 million shares to foreign investors at VND128,000 per share, raising about $922 million and valuing the bank at more than VND145 trillion at the time of the IPO ($5.51 billion at current exchange rate).

However, TCB shares fell the maximum 20% on their first trading day, closing at VND102,400. Supported by a well-defined growth strategy and effective governance, Techcombank’s market capitalization has since climbed to nearly VND250 trillion ($9.5 billion), up about 73% from its IPO valuation.

What should investors expect from IPOs?

These examples highlight a common reality in capital markets: an IPO that is successful in terms of capital raising does not necessarily translate into immediate gains in share price after listing.

In 2025, IPO activity and capital raisings regained momentum in Vietnam, with large companies such as Hoa Phat Agriculture, Gelex Infra, Techcombank Securities, VPBank Securities, and VPS Securities entering the market.

This wave has been supported by a more stable macroeconomic environment, relatively low interest rates, and expectations that Vietnam’s stock market is entering a new growth cycle, attracting strong investor interest.

In practice, short-term price performance of IPO stocks depends heavily on market timing and overall market sentiment. When macro conditions are favorable, industry cycles are in an expansion phase, and investor confidence is high, newly listed stocks can post solid gains.

Conversely, during periods of heightened volatility and risk aversion, post-IPO price corrections are common, both in Vietnam and globally. In defensive market phases, capital tends to favor stocks with long trading histories, high liquidity, and proven stability. IPO stocks, where supply-demand dynamics are still imbalanced and information has yet to be fully absorbed by the market, are more vulnerable to selling pressure.

Investor psychology also plays a key role in the post-IPO phase. Many investors enter with expectations of quick profits and are willing to take gains or cut losses if prices do not move as anticipated, adding to supply pressure and amplifying early price swings.

Short-term volatility, however, often fails to fully reflect a company’s intrinsic value. As earnings performance, governance capability, and growth strategies are tested over time and reflected in financial results, the market tends to reprice shares closer to their fundamental value.

As a result, a pattern of “short-term decline, medium- to long-term growth” is frequently observed among high-quality IPO stocks, particularly those with strong balance sheets, sustainable competitive advantages, and clear growth potential.

Overall, lessons from both Vietnam and international markets suggest that while IPO stocks often face short-term pressure driven by market conditions and sentiment, this does not diminish the long-term appeal of strong businesses.

For investors, a reasonable expectation when participating in IPOs is to focus on company quality, market context, and long-term holding potential, rather than immediate gains in the first trading sessions.