Fig 3. Monthly Chart of Square (SQ) Before It Settled Down
The stock of Square (SQ) took about 8 months to settle down before deciding whether it was going to become a winner or a loser. This is very typical with IPO Stocks and one of the first steps to separating the winners from the losers. I have found that the average length of an IPO stock to being displaying whether it will be a winner takes about 6 months to 12 months.
The lesson from this is that it is prudent to wait at least 6 months before jumping into an IPO stock. What this will do is keep you away from the losers. Almost all the charts of the IPO losers never recovered after 6 to 12 months. And those that did went on to become big winners making up to 47,000% returns.