Key takeaways

The largest U.S. IPO of all time is of Chinese e-commerce giant Alibaba ( BABA ) in September 2014.

A company must have a total valuation of more than $54 billion to crack the top 10 list of American IPOs.

The valuation includes the total value of all the company's stock, not just what was sold to the public, multiplied by the IPO's official offering price.

The largest American IPOs of all time consist of some of the most popular companies that have debuted on the New York Stock Exchange and Nasdaq. While the U.S. regularly has dozens of initial public offerings (IPOs) each year, most are nowhere close to making this list. In fact, some of the largest IPOs date back more than 25 years. To crack the top 10 list, companies need to have a valuation of more than $54 billion when their IPO is priced.

Here are the top 10 largest American IPOs by initial valuation.

The largest IPOs in American history

This list includes IPOs by what they priced at before they debuted, that is, the total market capitalization -- the value of all the company's stock -- when the investment banks sold the stock. So it's not the valuation at the end of the first day of trading, after IPOs have often soared.

It's also worth noting that this list does not show how much money the company raised in the offering. Often, new companies sell only a modest portion of the total available stock.

1. Alibaba

Chinese e-commerce giant Alibaba ( BABA ) was among the hottest things going, giving investors access to the brisk growth in e-commerce, as well as a way to invest in China's expansion.

IPO market cap: $169.4 billion

Current market cap: $293.7 billion

IPO date: Sept. 19, 2014

2. Meta Platforms

Now known as Meta Platforms ( META ), Facebook debuted as one of the hottest issues and a way to get exposure to social media. The stock fell quickly in its first few months of public life, however.

IPO market cap: $81.3 billion

Current market cap: $1.8 trillion

IPO date: May 18, 2012

3. Uber Technologies

Uber ( UBER ) was the flashy new ticket in the ride-sharing space, giving investors access to a quickly growing, though not profitable, ride-hailing app.

IPO market cap: $75.5 billion

Current market cap: $189.6 billion

IPO date: May 10, 2019

4. AT&T Wireless

The AT&T Wireless IPO was the largest in U.S. history at the time, coming in just as the dot-com bubble was exploding. Telecom was hot in 1999 and 2000, and here was the way to play it.

IPO market cap: $68.2 billion

Current market cap: Acquired for $41 billion in 2004 by Cingular Wireless

IPO date: April 27, 2000

5. Rivian Automotive

Electric vehicles were a hot commodity, particularly in the market run-up of 2020-2021, and EV maker Rivian piggybacked on investors' rising interest in Tesla and others.

IPO market cap: $66.5 billion

Current market cap: $16.6 billion

IPO date: Nov. 9, 2021

6. DiDi Global

DiDi is a Chinese transportation-for-hire company, and it took advantage of the surging market in 2021 to conduct its debut.

IPO market cap: $61.0 billion

Current market cap: $25.4 billion

IPO date: June 30, 2021

7. United Parcel Service

United Parcel Service ( UPS ) delivers mail and packages around the world, and at its IPO -- just months before the debut of AT&T Wireless -- it was the largest American IPO of all time.

IPO market cap: $60.2 billion

Current market cap: $86.5 billion

IPO date: Nov. 10, 1999

8. Coupang

The debut of South Korean e-commerce giant Coupang ( CPNG ) gave investors another way to invest in the growing economies of Asia.

IPO market cap: $60.0 billion

Current market cap: $54.8 billion

IPO date: March 11, 2021

9. ENEL

At the time, the IPO of ENEL, Italy's state-controlled utility, was the world's largest publicly traded utility company. The shares debuted in the white-hot U.S. stock market.

IPO market cap: $54.9 billion

Current market cap: Voluntarily delisted in November 2007 due to low trading volume

IPO date: Nov. 2, 1999

10. Arm Holdings

Arm was a hot property at its debut, and shares of the chip design firm gave investors a way to play the smartphone chip market, since the company's designs are used in most mobile phones.

IPO market cap: $54.5 billion

Current market cap: $173.0 billion

IPO date: Sept. 14, 2023

Should you buy IPOs?

Despite their first-day headlines -- or perhaps because of them -- IPOs tend to be typically bad performers after their debut, though they may wind up doing well over time.

Research from Bain & Company shows that about two-thirds of global IPOs from 2010 to 2014 underperformed publicly listed peers over a five-year period. Perhaps the most astounding part is that the median IPO stock underperformed by a whopping 46 percentage points in total.

So why do IPOs tend to underperform so much? Here are a few key reasons:

IPOs are hyped: IPOs are some of the most talked-about stocks on the planet, and that's a result of the hype process that goes into selling them. Investment banks that underwrite the IPO are interested in selling the shares to institutional investors and others, and even those buyers may be interested in selling in short order. So a lot of people are interested in promoting an IPO as a hot ticket.

IPOs come out at a period of high optimism: IPOs often debut during a relatively hot market, meaning that investors' risk appetite is relatively high. When the market is stable or bullish, companies rush to hit the IPO funding window since they think they may be able to get an attractive price -- that is, attractive to the seller -- for their stock.

IPOs are underpriced initially: The first-day pop that IPOs are almost legendary for is not evidence that an IPO is successful but rather that it was underpriced relative to the demand that exists for the shares. Ultimately, if a stock soars, it indicates that the newly public company could have raised more money than it did -- a real loss for the firm itself.

Low initial public float: Many companies sell only a relatively small fraction of their total outstanding stock, say, 10 or 20 percent. That small amount means that not everyone who wants the stock can get it, so if they rush to buy the stock on the first day, they'll push the price higher, a typical occurrence. (Here's how to buy IPO stock.)

For these reasons, IPOs tend to be a low-quality fishing hole for investors. After all, if the stock is such a great investment, why are insiders cutting in the public for a slice? There may be a good reason -- such as the firm raising capital to expand quickly -- but often insiders see an IPO only as an exit strategy for their investment. With capital available in private markets, many new companies are staying private longer, allowing their backers to capture more of the upside.

Savvy investors often turn to stock spin-offs as a source of unpromoted stocks that can fly under the radar of most investors. They're not promoted issues, so they don't get the hype that IPOs do, and few people have an incentive to let you know about them. Plus, insiders such as executives may like to keep the stock price lower until they get big stock and options packages.

Bottom line

While IPOs capture the headlines and investors' interest, they tend to be poor investments except for those investors who are able to get in before the IPO and enjoy the first-day pop. One notable exception here, however, is mutual thrift banks, which have a strong record of returns, though even they, too, can remain flat after their IPO before going on to offer better returns.