The mechanics of underwriting an IPO most investors have never read about — and where the smart money actually goes.
Listen to the audio version of this article (generated by artificial intelligence).
Editor’s note: When Wall Street gets excited about a new topic, ordinary investors need to be careful.
Right now, there are few topics generating more excitement than the next wave of AI IPOs. Cerebras just went public… and bigger names like SpaceX, Anthropic, and OpenAI may not be far behind.
I understand why investors are interested. These are some of the most talked about companies in the world. But as I’ve learned throughout my career, excitement is not the same as opportunity.
That’s exactly why, over the past few days I’ve been sharing articles from my InvestorPlace colleague Jonathan Rose. Jonathan doesn’t try to predict all the headlines months in advance. He’s looking for where the money is actually moving.
In today’s article, he explains why buying a hot IPO the moment it opens can put ordinary investors on the wrong side of the trade — and where the smart money could be put instead.
This is also why Jonathan and my good friend Mark Chaikin went live last night with the new affinity system.
During the event, they revealed five stocks where their signal is currently active.
The replay is still available to watch for free, but I won’t wait. These settings are already in effect.
Now, here’s Jonathan…
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Few things trigger investor FOMO like a hot IPO.
It’s a company everyone knows and then the stock doubles before lunch.
The financial media is covering it relentlessly and using phrases like “the next great tech platform.”
Suddenly, it seems like everyone is rich except you.
But in reality, this is usually the moment when investors become most vulnerable.
Let me tell you what happened with figma company (fig).
Figma makes design software used by creative and engineering teams to create apps, websites, and products. You may have never heard of it, but I guarantee your design team has.
Adobe Company (ADBE) Figma tried to buy it for $20 billion in 2022, but European and UK regulators blocked the deal, so Figma eventually became a public company on its own.
There was a lot of the usual hype around it at the time. It was a big story in the world of technology. Exactly the kind of IPO that gets retail investors excited.
Here’s what actually happened on day one.
Figma is priced at $33 and opened at $115. Everyone got so excited!
But what almost no one knew was a clause buried deep in the closing agreement that almost no one read, which stipulated that insiders did not have to wait a record six months for a sale.
A performance-based trigger was put in place that stipulated that if the stock traded 25% above its IPO price for five consecutive days, the lock would be released early.
The stock opened 158% above the threshold, and so the catalyst kicked in on day one. After 36 days, people who understood the structure were selling at $80.
Eight months later, Figma’s stock price reached $22 — down 81% from the peak and 33% below its IPO price itself.
Yes, slowing revenue growth and competition in the AI space hurt Figma’s business as well – but that doesn’t explain why insiders sold at $80 on day 36 while retail was still buying. The structure is designed to let them out.
They robbed us. This is the only way I can put it.
Now they set up the exact same trade again, except this time the numbers are an order of magnitude larger.
Cerebrase Systems Inc. (CBRS) It went public at $185, opened at $350, and fell 10% the next day.
SpaceX is next, Anthropic is next, and OpenAI is behind both.
Together, these three offerings represent more than $3 trillion in combined valuation. Almost every one of them is guaranteed to use a version of the same skeleton setup that took Figma’s price from $115 to $22 in eight months.
These are not bad companies. Some of them will be great companies. This is not the point. The structure is designed to take out the early money and leave the late money holding the bag. That’s it.
I’m talking about company insiders, the venture capital firms that helped fund its rise, and the large-cap funds that got their allocation at the offering price.
If you do not understand this structure, you will be on the wrong side of the trade.
That’s what I’m going to show you in this piece.
First, exactly how the trap works – using Figma as a blueprint, because details are important.
Then, where is the real money when these trades are printed?
And finally, where do we look now, before the biggest IPO wave in history hits us.
How does the trap work?
On July 31, 2025, Figma’s price reached $33 despite institutional demand that would have exceeded $85. Only 7% to 9% of the shares were offered — far below the typical price of 10% to 15% — sending the stock to record highs.
Then there was the piece that almost no one read.
The Figma insurance agreement included a performance-based early release clause. If a stock trades 25% above its IPO price for five consecutive days, 25% of the shares will be locked up after 36 days instead of the standard 180.
The stock opened 158% above the threshold. The early version went live on day one. 36 days after the IPO, Figma employees who understood the lock’s architecture were selling at $80. Executives filed 10b5-1 plans within days of the IPO — predetermined sales schedules that gave them legal cover to exit. The CEO authorized the sale of 3 million shares four days after the offering.
By February 2026, the stock price was $22.
This is not a “failed” IPO. This is the playbook. Currently, every AI IPO is structured by the same banks, with the same incentives, and using the same tools.
When you buy at an open price, you are not making an intelligent investment. You provide “exit liquidity” to people who entered the market a decade ago.
Don’t be a sucker.
Where is the real money?
This is the system that works in every IPO, including SpaceX, Anthropic, and the rest of the AI IPO pipeline.
First: Do not buy short. The opening price in an IPO is an imbalance between supply and demand due to intentional underpricing. Pop is the gift for insiders. By the time you click “Buy,” the gift has already been delivered.
Second (and this is what most investors miss): Buy the “family,” not the headline. Every AI IPO in this track has publicly traded agents that you can buy today.
At SpaceX Alphabet Company (Google)Which owns 6.11% of the company. Anthropic has Amazon.com Inc. (Amzn) and Nvidia company (NVDA). OpenAI has Microsoft Corporation (MSFT).
They all have supply chain plays that you can buy today, and the picks and shovels that each of these companies need to operate.
These names are as easy to buy as a loaf of bread, there’s no risk of closing, no allocation problem, and no premium built on a float that was too small.
Third: View the imprisonment calendar. Once a company goes public, the most important dates are not the earnings dates. They are lock expiration. The biggest declines almost always occur around those windows. This is when insider selling occurs and the stock finally trades at something closer to its actual value.
This is exactly the type of setup my scanner has Mark Chaikin Tools are designed to be found together.
My signal follows where large, concentrated institutional bets appear — in supply chain names, in dealerships, before the crowds arrive. The MARC Money Flow Index confirms whether the underlying institutional capital is flowing in the same direction. When both signs agree, that is Convergence operator.
Right now, with the largest IPO wave in history weeks away, the supply chain is already moving, and the family is already trading. Our affinity trigger has actually found setups in names that no one is talking about – because everyone is staring at the headlines.
This is what Mark and I will announce at our new party Peak convergence Event – including five specific stocks where our affinity trigger is currently active.
Cerebras was the dress rehearsal… but SpaceX is the main event. Institutions know what’s coming and have already made their allocations. They will be sellers on day one.
Family equity and the supply chain are already moving. Trading in the largest IPO wave in history is not waiting for the bell.
The creative trader wins
Jonathan Rose
founder, Master of Commerce
note: Another thing worth knowing before SpaceX prices. Look on the S-1 for “early release status” or “performance-based release.” If Lockdown issues additional shares when the stock is 25% above its IPO price — and the company prices low enough to warrant a run — then you’re looking at a Figma structure. This is your signal to back off, not intervene. Go here to watch my and Mark’s new free stream, and I’ll show you exactly where to look instead.
