The US IPO market just had its busiest quarter in over 20 years - but newly public stocks are underperforming, a Renaissance Capital report finds

• 102 companies went public in the first three months of 2021 in the busiest quarter for IPOs in over 20 years.
• But an index that tracks newly public companies is underperforming the S&P 500 for the quarter.
• While some major IPOs like Bumble and Coupang have soared in price, other companies have disappointed.
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The first quarter of 2021 was the busiest quarter for initial public offerings in the US in over 20 years, according to a report from Renaissance Capital. 102 companies went public and raised $40.3 billion, fueled by momentum from 2020, high volume, and large offerings.

But as excitement around IPO activity has gained, the performance of the newly public companies has lagged. The Renaissance IPO Index fell 7% in the quarter, compared with the S&P 500, which rose 4% in the same time period. The IPO index began to underperform the benchmark in mid-March.

In addition, IPOs in the first quarter averaged a 32% first-day "pop," but saw excitement fade after the close of the first day of trading. On average, companies that have gone public in the quarter have lost 14% from their first-day closes.

That performance is significantly weaker than the previous quarter. Companies that went public during the fourth quarter of 2020 averaged a 37% first-day pop, and then gained an average 28.2% for the rest of the quarter.

A number of companies with high-profile IPOs have lowered their own expectations, prompting some investors to question whether this market has overheated in the last year.

On Wednesday, Compass slashed its IPO price range and cut its expected valuation from $10 billion to $7 billion. In London, Amazon-backed Deliveroo priced its shares at the bottom of its range on Tuesday, and then tumbled 30% during its first day of trading.

Others have got a warm reception from investors, like dating-app Bumble, which was one of the best performing US IPOs in the first quarter. According to Renaissance, it's gained 45.8% since its IPO. It was the second-largest deal behind South Korea's Coupang, which listed in New York, and has returned 25.1% since going public.

However, Renaissance shows out of the 10 largest US IPOs from the quarter, three of them have seen negative returns since their public debut: Playtika Holding, Oscar Health and RLX Technology.