After a new stock's listing price is halved, what should retail investors do?

Recently, many newly listed stocks have plummeted by 50%. How should retail investors respond to this phenomenon? In my view, the most appropriate attitude is to ignore them—don’t watch, don’t buy, and don’t pay attention—at least for two or three years. Only after observing the company’s fundamentals and comparing them with peers in the same industry can one begin considering buying or selling. First, we must understand that the offering price of a new stock is typically quite reasonable—though slightly inflated, it generally falls within institutional investors’ rational expectations. If the opening price were set too high, the underwriter would be obligated—under the green-shoe mechanism—to cover a certain percentage of unsold shares, resulting in substantial capital lock-up and potentially massive losses. Therefore, the offering price cannot be excessively high; otherwise, a post-listing decline (‘breaking issue’) would be highly embarrassing. Drawing on mature-market experience, many U.S. IPOs rise roughly 20% on their first day—some rise more, even over 50%, while others fall below the offering price—but the average gain hovers around 20%. Though modest, this level of appreciation is relatively friendly for investors participating in the initial public offering. Now consider our domestic IPOs: a 100% gain is considered minimal; a 200% surge is normal; gains of 400–500% are viewed as strong; and a tenfold increase qualifies as exceptionally lucrative. Such extraordinary returns have long since strayed far beyond the fundamental safety zone established by the offering price—not merely overvaluation, but rather irrational speculation. Under these conditions, expecting to profit is pure fantasy: among one hundred newly listed stocks, perhaps only one might deliver positive returns for an investor who buys at the opening and holds for two or three years. From the perspective of corporate fundamentals, the offering price usually already incorporates a 20–30% upward adjustment—or ‘beautification’—of underlying fundamentals. After raising a large sum, unless used solely to replenish working capital, the company will likely achieve some revenue or profit growth. Yet such growth rarely accelerates rapidly—50% is already near the ceiling. Combining this with the roughly 20% artificial inflation baked into the offering price by underwriters, achieving even a 20% growth target in Year One is already commendable. Overall, this implies a first-day appreciation comparable to the ~20% typical in U.S. markets—meaning Year One’s profit growth has already been fully priced in. Performance in Years Two and Three becomes highly uncertain: favorable macro conditions may spur further growth, but deteriorating conditions are equally plausible. Companies almost always go public during peak cyclical prosperity—‘bleeding’ listings (i.e., those launched amid distress) are generally prohibited here. Yet cyclical peaks rarely last beyond three years; thus, a sharp downturn in industry conditions may well occur as early as Year Two post-listing, rendering capital investments futile, triggering severe overcapacity, and possibly causing profits to shrink—let alone generate returns. Under ideal conditions, a 100% first-day surge would require the company to sustain profitability for three to four consecutive years before being justified. A surge exceeding 300% would demand exceptional timing—a confluence of broader macroeconomic opportunity—not just organic corporate growth. Absorbing such extreme valuations purely through internal growth is extraordinarily rare—perhaps one in a hundred, or even one in a thousand. Since corporate earnings growth alone cannot justify these valuations, the only remaining path is downward price adjustment. Hence, for the overwhelming majority of stocks, the listing day marks their all-time high—with virtually no chance of surpassing that peak within the next four or five years.

The Nasdaq has crashed—can Chinese companies still pursue U.S. listings?

This is a macro-driven valuation correction—triggered by rising interest-rate expectations and higher risk-free rates, leading to markdowns in high-valuation tech stocks. It reflects neither deteriorating corporate fundamentals nor structural problems specific to Chinese American Depositary Receipts (ADRs). Key Judgment: Volatility driven by macro sentiment is short-term noise—it does not alter the medium-term logic governing IPO windows. What truly determines whether you can list is something else entirely. 02 The Real Landscape of Chinese ADR Listings in 2026 Let’s look at the data—not the sentiment: Dimension Q1–Q2 2026 Status Overseas Listing Filings Approved 7 companies completed overseas listing filings in Q1, with approval pace continuing to accelerate. IPO Filings Submitted in June Three companies filed prospectuses in a single week—the highest level in recent months. Fundraising Size Typical range: USD 20–50 million, aligning with Nasdaq’s listing thresholds. Policy Environment SEC regulatory framework is now largely clarified; compliance costs are predictable. Cornerstone Investments Multiple companies filing prospectuses have already secured cornerstone commitments from international long-only funds. The reality is clear: the IPO pipeline has not dispersed due to market volatility. Companies continue filing; intermediaries keep preparing documentation; and filing approvals are accelerating. 03 But There’s One Thing Many Haven’t Noticed Amidst this market turbulence, a hard regulatory rule is quietly approaching its effective date: Nasdaq Rule IM-5101-4 Enters Final Countdown Effective from 2026, Chinese companies listing in the U.S. will face a minimum initial fundraising threshold of USD 25 million. Historical data shows that Chinese ADRs raising less than USD 25 million exhibit a nearly 50% non-compliance rate. Companies failing to meet the USD 25 million threshold now face mounting pressure: their compliance window is closing. This means: ・Companies targeting fundraising just above the USD 25 million threshold must re-evaluate their capital structure design; ・Smaller-scale enterprises must either expedite entry into formal listing channels—or risk passive marginalization; ・Companies that have already filed prospectuses must proactively secure cornerstone investor commitments to reduce issuance uncertainty. Market volatility can wait—but the regulatory countdown cannot. 04 So What’s the Right Move After This Plunge? Three actionable assessments for companies actively pursuing U.S. listings: ① Do not halt your process simply because the broad market has fallen. Macro-driven selloffs typically rebound within two to four weeks. What truly affects your listing success is your progress on documentation, filing approval timelines, and capital market window timing—three areas you can advance full-speed ahead—even amid a bear market.

Argentina's US IPO Revival Stalls as Market Rout Chills Debuts

14 hours ago

Two Argentine energy companies, Genneia SA and YPF Luz, have paused US IPO plans amid falling asset values and global market turmoil. The delays reflect deteriorating investor sentiment despite strong growth in Argentina's energy sector and shale oil exports.

bloomberg

2026-11-03

Argentina's US IPO Revival Stalls as Market Rout Chills Debuts

Argentina's US IPO Revival Stalls as Market Rout Chills Debuts

FAQ