Host: Splashy IPOs make headlines, but do they make sense for long-term investors? Coming up, we find out whether early excitement ever matures into long-term business success.

From Thrivent Asset Management, welcome to Advisor’s Market360, a podcast for you, the driven financial advisor.

No doubt you’re aware of the IPO, or initial public offering, for SpaceX. It was big news because the IPO was the largest ever and generated approximately $75 billion for the company. Clearly the SpaceX IPO was an outlier in terms of size, but other companies including Anthropic and OpenAI are also preparing for IPOs that will be similarly large.

But after the IPO excitement ebbs and the dust settles, how will these companies fare? Will their long-term prospects be as enticing as their initial offering?

To help answer those questions and others, we tapped into the knowledge of three Thrivent Asset Management experts: Steve Lowe, Chief Investment Strategist, Jim Tinucci, Head of Equity Investments and Lauri Brunner, Senior Portfolio Manager for Thrivent Large Cap Growth Fund.

Let's get into it…

The primary reason a company goes public through an IPO is to raise capital. We wanted to learn why everyone seems to be talking about IPOs right now. Here’s Lowe:

Steve Lowe: Well, I mean, a couple things. One, it's always interesting. I think what's going on in the capital markets. And two, you have the largest IPO in history, and you have two others that will be ginormous too. You know, you had SpaceX is the largest, Anthropic and OpenAI are supposed to come and they're supposed to get around trillion-dollar valuation. So there's a lot of focus on it.

Host: Brunner had this to add about the SpaceX IPO:

Lauri Brunner: There was more retail attention given the huge following that Elon Musk has, and retail investors were given higher priority or more prominence in this IPO, in the SpaceX IPO, compared to other IPOs.

Host: We asked Lowe about the total volume of IPOs through July of 2026:

Steve Lowe: So total IPOs are about 215 through July. Now that includes smaller ones and varies from market caps of $5 billion to billions and trillions of dollars, and that's up slightly from last year. If you look at just large IPOs, which most people are focused on, year to date, there's a little bit under 100 through July, which is down about 24%. The amount raised, however, is around $144 billion, which is 6 times last year, and that's largely due to SpaceX IPO.

Host: Tinucci added further context…

Jim Tinucci: I think one thing to keep in mind as well is sometimes when you look at the data, you have to separate dollars from volume activity. And so to say that it's materially picking up in dollar activity, we've seen it based on some of the large IPOs that are out there now. But from a volume perspective, it's not that high. It's still materially below a long-term average.

Host: Returning to the idea of using IPOs to raise capital, Lowe explained why AI companies need a lot of capital:

Steve Lowe: There is a massive demand for capital to build out AI. And you see that in the debt markets, record issuance within the corporate market for that. You see that in private credit markets. And you also see that that's one of the reasons why people are going public is to raise capital because their spending plans, if you look at the hyperscalers, the large AI players, it's over a trillion a year in CapEx.

Host: The ongoing interest in IPOs naturally leads to a discussion about investing in them. But participating in IPOs when they go public can be challenging, especially for long-term investors. Tinucci explains why…

Jim Tinucci: Being long-term investors, we're not in the market trading every day like a hedge fund. We're not the largest clients of these investment banks that have discretion over their allocation of IPOs. And so we often, when we get an allocation, we need to be in the market later purchasing these securities.

Host: Later allocations often come with a price disadvantage. Again, here’s Tinucci:

Jim Tinucci: And a lot of the research— there's a lot out there, academic and, uh, real-world, uh, research that is showing that, you know, the first day pop is your 15+%, depending on your time frame. And it's from that is a lot of statistics where you really see that decline after that.

Host: Tinucci explains why Thrivent Asset Management takes a cautious approach to investing in IPOs

Jim Tinucci: We generally take a measured approach with a preference for companies that have established operating histories and more publicly available information.

Host: Another reason for long-term investors to be wary of IPOs is that the early excitement of the offering doesn’t always translate to long term business success.

Steve Lowe: The track record of IPOs is in general not great. You know, it obviously depends on the company and the air, but historically they, they lag benchmarks, you know, to begin with. I think the University of Florida did a study that found 56% of IPOs lose money relative to their offer price after 3 years. You know, and you measure the first day closing price, 60% of IPO returns are negative within 3 to 5 years. And that's because, you know, they tend to pop on that, that first day.

Host: Lowe said poor performance of IPOs is most acute in the first year:

Steve Lowe: So the 10 largest IPOs since 1999 returned to negative 30% in the first year of trading on, on average.

Host: We asked Lowe for examples of poor post-IPO performance:

Steve Lowe: If you look at Facebook, for example, they fell pretty sharply after their IPO. Alibaba, you know, the Chinese e-commerce company, had a very large successful IPO at the height of China's tech boom in 2014 that had a very sharp correction after that. So it's not really indicative of the long-term performance of the company, it's just the market that they go into.

Host: From a long-term perspective here’s how Brunner describes her thinking about IPOs:

Lauri Brunner: I think the valuations should go up. It does not mean that the IPOs of 2026 or 2027 will do well that year. I think there is a ton of potential over time. The stocks may not do well right out of the gate.

Host: Next, we wanted to know how active managers, like those at Thrivent Asset Management, evaluate newly public companies. Brunner provides this overview:

Lauri Brunner: We research companies, we invest in companies, we in part control our risk with the weight, the bet, the percentage of the fund that is allocated to that company. So there is a risk overall to the market to a company's growth trajectory to getting to profitability at a certain time. Our job is to control risk with how much of the company we own. So we are always cognizant of that.

Host: We asked for an example of how this process played out with a potential investment. Here’s Brunner again discussing her process for adding SpaceX to Thrivent Large Cap Growth Fund:

Lauri Brunner: In terms of evaluating SpaceX as a company, with the numbers that we were provided during the pre-IPO process, when we look at the expectation for revenue growth, so the size of the market potential, the size of the space economy is important, but the revenue growth that that SpaceX is expected to generate over the next 2 years. They're expected to grow revenue at 84% a year over the next 2 years.

Host: We wanted to get some insights into how AI could influence the next generation of IPO opportunities. Here’s Lowe…

Steve Lowe: What is unique about the current IPOs is just the size of some of the mega-cap companies coming. We've already had a trillion-dollar IPO in SpaceX, and we have two more trillion IPOs most likely coming, which includes Anthropic. The creator of the Claude AI agent, and also OpenAI, which created ChatGPT. And we've never had three $1 trillion IPOs in a year before.

Host: AI is producing extraordinary growth rates far beyond those normally associated with mature public companies. Brunner sites the examples of Anthropic and OpenAI:

Lauri Brunner: They have grown from $35 billion in annual recurring revenues to $130 since January. In 7 months, they're up 3.7 times from $35 billion to $130 billion in revenues. Now, not reported revenues. That's the publicly available information that we are tracking. It is astounding, the level of demand. And what's happening underneath the covers is that enterprises like ours are using AI to figure out what their best use case is, their specialized use case for research, for accounting, for HR, for manufacturing, for engineering. That is what's happening right now to allow these revenues to explode so rapidly. We haven't seen anything like this before.

Host: One concern Brunner has is that the IPOs for these AI companies could create a winner-take-all or take-most situation. She explains:

Lauri Brunner: Part of the fear, I think, is that one or two companies will run away with the market. But historically, that's been the case. That has been allowed. It has been tolerated. We'll see if that happens right now. So you may have heard the term winner take all or winner take most, which is often the case with technology companies. And I think part of the talk about regulating is to try to ensure that two companies don't run away with the market.

Host: Lowe is concerned that regulation of AI could put a damper on future IPOs for the technology. He explains:

Steve Lowe: AI regulation is one area where there is some overlap between Democrats and Republicans and a potential area of cooperation. However, the current administration is actually very supportive of artificial intelligence, but it is a risk. I don't think the government wants to kill the growth driver of the economy right now. They may want to regulate it. They may want to, you know, put some rules on it, but I don't think it will be to the extent that it, you know, stifles growth and innovation. And we are in a global competitive race with this. They also are very cognizant of that.

Host: We hope you gained some valuable insights into IPOs.  We would like to thank Steve Lowe, Jim Tinucci and Laurie Brunner for sharing their knowledge about the subject. What did you think of this episode? Email us at podcast@thriventfunds.com with your feedback or questions for our experts. Want more episodes of Advisors Market360 and other market and investing insights? Visit us at thriventfunds.com, where you can learn how we can partner with you, the driven financial advisor. Bye for now.

DISCLOSURES:

All information and representations herein are as of 8/6/2026, unless otherwise noted.

Past performance is not necessarily indicative of future results.

The views expressed are as of the date given, may change as market or other conditions change, and may differ from views expressed by other Thrivent Asset Management, LLC associates. Actual investment decisions made by Thrivent Asset Management, LLC will not necessarily reflect the views expressed. This information should not be considered investment advice or a recommendation of any particular security, strategy or product. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon, and risk tolerance.

This commentary refers to specific securities Thrivent Large Cap Growth Fund owns. Additional information about the holdings of the fund is available on thriventfunds.com.

The fund's top 10 holdings as of June 30, 2026, excluding derivatives and cash, together accounted for 52.64% of the fund. They are: NVIDIA Corporation, 10.53%; Amazon.com, Inc., 7.35%; Apple, Inc., 5.95%; Alphabet, Inc., Class A, 5.23%; Microsoft Corporation, 4.92%; Alphabet, Inc., Class C, 4.36%; Broadcom, Inc., 4.30%; Meta Platforms, Inc., 3.63%; Lam Research Corporation, 3.34%; and Advanced Micro Devices, Inc., 3.03%.

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