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

Energy companies are rushing to the public markets as investors bet on the AI infrastructure boom, but the execution has been messy and the results disappointing. Fervo, a company backed by major investors, raised more than $2 billion（約3200億円） when it went public in May and says it views public markets as a way to grow faster. That initial enthusiasm, however, masks a deeper problem: nearly two-thirds of energy companies that floated in 2024 and 2025 are now trading below their IPO offer price, according to Dealogic. By contrast, less than 40 percent of IPOs across all sectors are underwater. The divergence is striking and concentrated among several high-profile deals.

X-energy, which develops small modular nuclear reactors and is backed by Amazon, came to market in April at $23 per share and is now trading 33 percent below that price. ERock, a gas generator maker, has lost 42 percent of its value since its June IPO. Fermi, a data center energy company, has fallen 68 percent since its September debut. Deep Fission, which is designing nuclear reactors to be buried one-mile underground, raised only $40 million（約64億円） in June—a 73 percent shortfall from its initial fundraising target—and its shares are down 33 percent since the IPO.

Investment bankers and traders have become concerned about the pattern. Brian Kessens, senior portfolio manager at Tortoise Capital, an energy-focused investment firm, explained that some traders are buying into IPOs and then quickly selling to move into the next deal rather than holding shares. He called on investment banks to set "reasonable valuations" and be more selective about distributing shares to investors likely to flip them fast. RBC analyst Dendrinos added that some traders view strong IPOs as "in some sense free money," suggesting a purely speculative mindset.

The problem is not uniform across the sector. Companies with proven business models are holding up better than those with unproven technology. Some companies, such as X-energy and Deep Fission, are developing technologies that critics say are not yet proven to be technically or commercially viable. Jeff Osborne, a sustainability and energy transition analyst at TD Cowen, noted that companies faring better in the market "have a real business now" and are "less of a science experiment." The implication is that the initial wave of AI-driven enthusiasm may have created an opening for unproven technologies to reach the public markets at inflated valuations, only for reality to correct those expectations once trading begins.

The surge in energy IPOs reflects a strategic shift by investors seeking exposure to the AI boom through an indirect route. Rather than betting directly on hyperscalers (large cloud providers) whose stock prices have already soared, traders are turning to smaller companies that supply or support AI infrastructure—particularly in energy, which is critical for powering data centers. However, the body's data reveals a sharp disconnect: nearly two-thirds of energy IPOs from this year and last are trading below their offer price, compared with less than 40 percent of all-sector IPOs. This underperformance points to a structural problem in how these deals are being priced and distributed.

The article attributes this weakness in part to "flipping"—a pattern in which investors buy at IPO and sell shortly after for a quick gain, rather than holding shares long-term. Brian Kessens of Tortoise Capital notes that traders are "rolling into the next one," suggesting a speculative wave rather than fundamental conviction. Investment banks are also being called out for setting valuations that are unrealistic and for not being selective about buyer intent. Analyst Jeff Osborne at TD Cowen draws a sharp line: companies with "a real business now" are holding up better, while those that are "less of a science experiment"—a category that includes X-energy and Deep Fission, which are developing unproven technologies—are suffering steeper declines. This distinction matters because it suggests that market discipline is returning after an initial burst of hype-driven buying.