Wall Street is buzzing with IPO fever as traders anticipate debuts from SpaceX, Anthropic and OpenAI, viewing these offerings as generational opportunities to capitalize on the artificial-intelligence surge driving market gains.

Research from Eve Boboch, Kathy Donnelly, Eric Krull and Kurt Daill in 'The Lifecycle Trade' reveals that more than 90% of IPOs eventually trade below their first-day low, testing even experienced growth investors. This volatility creates significant downside risk for early buyers who chase opening pops.

The authors recommend waiting for an 'IPO base' to form within the first 25 days of trading, essentially a technical rest stop where price stabilizes in a narrow range. Institutional investors use this period to accumulate shares and establish price floors, typically taking two to five weeks but sometimes as little as seven days.

After the initial peak, expect a shallow pullback of no more than 20% before considering purchase, though volatile markets can see drops of 50%. This disciplined approach helps investors avoid the typical post-IPO crash while positioning for more sustainable gains.