First-Day IPO Trading Flops Threaten Next Wave of US Debuts

Wall Street loves a perfectly choreographed IPO, with more shares offered and prices increased in the lead-up to the deal, to signal rising demand. At the climax, shares of newly-listed companies pop on their first trading day, priming the market for even more hyped-up debuts.

Instead, three of the US’s four largest initial public offerings this year have traded below their offer price in their first session — a black mark on any deal, never mind while stock benchmarks flirt with record highs.

“The secondary trading shows that investors remain cautious about valuation,” said Rob Stowe, head of ...