Cerebras went public Thursday in what was supposed to be a triumphant moment for AI hardware. Instead, it became a cautionary tale about what happens when hype meets reality.
The company IPO'd at $185. Opened at $350. Closed the first day at $311. By day two, it dropped another 10%. That's a classic pump-and-dump pattern, and it should make every retail investor think twice about the AI IPO wave that's coming.
Because here's what's on deck: SpaceX (which merged with xAI), OpenAI, and Anthropic could all go public this year. These aren't small companies. If even one lists, it'll dwarf Cerebras in size and media attention. The SpaceX IPO alone is targeting a $1.75 trillion valuation.
The question everyone should be asking: does all this IPO capital create new market value, or does it just rotate existing money around?
The last time we had a mega-IPO wave was 2020-2021. Snowflake, Coinbase, Robinhood - names that sucked up huge amounts of retail attention and capital. Some of those worked out. Many didn't. And while the IPO frenzy was happening, a lot of existing tech holdings went sideways for months because money was rotating into the new shiny objects.
Right now, the macro backdrop is messier than 2020. Oil is above $100. Bond yields are spiking. Inflation isn't cooperating. The Fed is talking about rate hikes instead of cuts. That's not an environment where institutional investors have unlimited appetite for richly-valued IPOs.
For retail investors specifically, the Cerebras IPO is a perfect example of the dynamic you need to understand:
Day 1: Massive pop from $185 to $350. Headlines scream about the successful listing. FOMO kicks in. Retail buys at $350.
Day 2: Stock closes at $311. Retail is down 11% in 24 hours.
Day 3: Another 10% drop. Now retail is down 20%+ while insiders and early investors who got in at $185 are still sitting on gains.
This isn't unique to Cerebras. This is . The initial pricing is set by banks to guarantee a first-day pop. That pop creates headlines. Retail investors chase it. Then reality sets in and the stock finds its actual trading level - which is usually below the opening spike.
