Energy IPOs surge on AI boom, but two-thirds now trade below offer price

Key takeaway

• Energy companies tied to AI infrastructure are experiencing a surge in IPO activity, but nearly two-thirds of those that floated this year and last are now trading below their offer price—a far worse track record than IPOs across all sectors.

• The divergence reflects investor caution about whether major cloud providers can turn massive AI spending into profits, driving interest in smaller energy firms instead, though some traders appear to be buying and quickly flipping these stocks rather than holding them long-term.

3 Key Points

Context & Analysis

FAQ

Why are energy companies going public right now?

Investor interest in energy IPOs stems from growing concerns about whether hyperscalers can convert their huge AI spending into profits. Many traders are instead looking at smaller companies in other sectors, including energy, that are likely to benefit from the wave of AI investment.

How are these energy IPOs performing after going public?

Nearly two-thirds of energy companies that floated this year and last are now trading below their offer price. X-energy is down 33 percent from its $23 offer price, ERock has lost 42 percent since June, Fermi is down 68 percent since September, and Deep Fission is down 33 percent after raising only $40 million（約64億円）—a 73 percent shortfall from its initial fundraising target.

What is driving the post-IPO sell-off?

Some traders are buying into IPOs then quickly selling and moving to the next one, according to Brian Kessens at Tortoise Capital. Investment banks are being urged to set "reasonable valuations" and be more careful about selling shares to investors likely to flip them fast.