The booming IPO season has brought a fresh wave of excitement among retail investors and, according to Zerodha founder and CEO, Nithin Kamath, a worrying rise in reckless behaviour. He says
Kamath said he is seeing unusual activity in the unlisted market, where shares of companies are sold before their IPOs at hefty mark-ups.
“Given how hot the IPO market is, I’m hearing some phenomenally stupid stories from the unlisted market. People are blindly punting on so-called ‘pre-IPO’ companies hoping they’ll make bigger gains than during the actual IPO,” he warned.
He explained that many of these pre-IPO shares are being sold at extreme premiums.
“These shares already come with 100–500% markups, ridiculous commissions, and terrible pricing,” Kamath said.
The bigger danger, he added, is that investors may actually lose money before the IPO even begins.
“There have been numerous cases where the IPO price ended up lower than the price at which people bought shares in the unlisted market. All those ‘gains’ wiped out before you even start,” he noted.
Kamath also expressed surprise at how popular unlisted shares have become.
“I honestly didn’t expect the unlisted share space to become this popular,” he said, pointing out that some platforms are now aggressively promoting pre-IPO shares through WhatsApp blasts. “It’s kind of crazy what’s happening out there,” he added.
With more IPOs expected in the coming months, Kamath’s cautionary message serves as a reminder for small investors to avoid getting carried away by hype.
Experts often advise retail buyers to be extra careful with unlisted shares, as pricing, liquidity, and transparency can be far poorer than in the regular market.