The Prophet’s Perspective: IPO Openings Are Hot But the MOO Is Running Too Hot

The IPO tape is blazing — Klarna, Gemini, Black Rock Coffee, LB Pharma, and WaterBridge all cleared last week, showing just how wide this window has become. But beneath the fireworks, our Forecast Ratio says the market-on-open is running too hot. Elevated opens are translating into early volatility.

The past week was the busiest the IPO market has seen in years. Finally we saw Klarna cross the tape, Gemini delivered fireworks, and offerings from Black Rock Coffee Bar, LB Pharmaceuticals, and WaterBridge reminded us that the window isn’t sector-specific anymore. What matters here isn’t simply that deals are printing — it’s that demand is proving deep and diversified. But there is an important caveat to make in the midst of all this action.

We watch the opening trade for every IPO more intensely than just about anyone. We view it as critically important to the future trading trajectory of a company. That trade sets the tone for the days and months to come for a new stock. We long ago developed a metric called the Forecast Ratio that measures the size of an IPO’s opening trade relative to what we would expect for the offering’s size and premium. Lately we have seen a streak of offerings open on what we consider to be elevated volumes only to sell off hard from that opening trade.

If the opening price is too high and volume too low spells a near certainty for lower prices. If you have the right data and a framework to evaluate, this is an easy call to make. There is a sweet spot for price and volume and those are exquisite moments when they occur. Beyond that the game gets much trickier. According to our metrics — high prices and exceptionally high volumes — the data only really tells you that volatility will be high. In these moments, we know a big move is coming but less about the direction of that move.

That’s exactly what our analysis confirms. When we look at the Forecast Ratio historically:

• Above 1.25 → biggest swings, both ways.

• 0.6–1.25 → steady, balanced.

• Below 0.6 → fragile, downside risk.

Quantitative Snapshot of Day-1 Outcomes by Forecast Ratio:

The share of IPOs opening with Forecast Ratios above 1.25 has climbed sharply since 2023 — a signal tied to more volatile trading after the open.

Since the Circle IPO kicked off a strong wave of IPO enthusiasm last spring we have seen a steady increase in opening trades with elevated Forecast Ratios well beyond our 1.25 level, and we think it reflects a psychology of market chasing on that opening print with relatively low conviction. Firefly Aerospace, Bullish, and Gemini Space Station are all examples of elevated Forecast Ratios where strong opening demand quickly reversed into hard selling.

This action underscores why watching the opening trade is so important. Through a quantitative lens, the open becomes a roadmap for tactical decision-making. And right now, the map is clear: chasing the MOO too aggressively isn’t working. In a market that looks wide open, patience is the real edge.