‘Advised to refrain from chasing purchases’ amid surge in AI-related IPOs

IPOs by AI-related companies are increasing. Some stocks showed a pattern of repeated sharp rises and falls immediately after listing. The report cautions against buying while chasing an initial surge. It says investors should first check earnings and revenue visibility, as well as whether recurring-revenue contracts are in place. The article says to review lock-up expirations and the potential risk of large-scale selling afterward. It includes a recommendation to check the proportion of issued shares available for trading and changes in the shares held by key executives. It points out that an expansion in the tradable float could put downward pressure on share prices. It says valuation and profitability metrics should also be reviewed. In particular, it emphasizes whether the earnings structure is supported relative to revenue growth. It explains that newly listed companies often show revenue but have weak cash flow. It also presents ways to reduce market exposure. Rather than individual stocks, it recommends an approach through ETFs or sector baskets. It also advises keeping positions small immediately after listing and watching the situation after the lock-up expiration. The article includes a practical checklist. It says to review, in order, the lock-up expiration, the durability of revenue contracts, changes in shareholder composition, and stabilization purchases by underwriters. It recommends taking a gradual approach based on these items.