Bill Ackman’s fund IPO flops on day 1, down nearly 20% – but first-day flops don’t always mean long-term failure
Could one of America’s loudest investors build the next Berkshire Hathaway?
That is certainly the desire of Bill Ackman with the fund Pershing Square USA, Ltd. [NYSE:PSUS]launched on the New York Stock Exchange on April 29.
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Technically, this is a “closed-end fund” that provides exposure to Pershing’s portfolio. But the Wall Street Journal reports that Ackman doesn’t like to use that label and instead calls PSUS “an investment management company on the street of a closed-end fund (1).”
To differentiate his product, Ackman promises to make his investments interactive. As he told CNBC (2), “We’re going to have investor days. We’re going to have an annual meeting, Berkshire Hathaway style, where people come and ask questions.”
But even with these unique features — and the deal that gave investors one share of his firm, Pershing Square, Inc. (PS) in all five PSUS stocks – retail investors seem to be getting cold feet.
On its first day of trading, PSUS fell 18% from its initial price of $50 per share to a closing price of $40.93 (3).
Reports also indicate the amount raised by PSUS and PS was below Wall Street’s expectations. As CNBC reports, Ackman has raised $5 billion from institutional investors, but analysts put a higher estimate of $10 billion (4). Remember that Ackman tried to bring the same agreement with Wall Street in 2024 with expectations of $ 25 billion.
Although $5 billion was relatively “low,” it made PSUS one of the 10 largest IPOs of the past 10 years, according to the WSJ.
And Ackman isn’t fazed by all the sales pressure. The next day, he sent X to acquire 500,000 shares of PSUS and 800,000 shares of PS (5), saying “PSUS is trading at a significant discount to its $49 cash per share.”
According to the WSJ, Ackman is confident it will be “a great long-term ride” for his new shareholders.
Do IPO flops always fail?
Historically, IPO day will probably sound more like fireworks than a dumpster fire.
In fact, data from Jay R. Ritter of the University of Florida suggests that recovery means almost the exact opposite of how PSUS worked. Using data on IPOs between 1980 and 2025, Ritter noted an average first-day return of 18.8% (6).
But just because Ackman had a rough first day didn’t drop his wallet.
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For example, Axios found that the largest IPOs in 2025, including Circle and Newsmax, fell below their IPO prices one year later (7). Therefore, a euphoric debut is not a good sign for long-term investors. There are also many other stories where companies are slowly moving back after a brutal first day of sales.
Famously, Facebook’s Meta Platforms had a very tumultuous IPO in 2012 with its shares falling below the offering price of $38. Impatient early investors sold on Zuckerberg, driving the stock down 50% before returning to $38 in 2013. Despite all the volatility, those who stuck with the company enjoyed about 18% of profits over the next ten years, according to Statista data (8).
Uber’s IPO is another example. Despite its status as a ride-sharing giant, the company’s stock has struggled to maintain its $45 offering price in 2019 (9). However, in 2026, Uber proved to be a winner for long-term owners, with an average annual return of about 7.5% (10).
Is it safe to chase IPOs?
Whatever your feelings about Bill Ackman, this first-day failure means nothing in the long game. We will know for sure that Pershing Square is a true competitor of Berkshire Hathaway as the years go on.
Also, the design of the closed bag adds complexity to this case. These funds raise money up front through an IPO and then trade like a stock. Therefore, the price of PSUS shares can go above or below the value of the investment it holds (11).
In simple words, you don’t just buy assets at face value like in a mutual fund. There is too much room for volatility in a closed-end fund based on market sentiment.
Putting this closed-end fund deal aside, just know that buying into any IPO is not a sure bet. While there is a temporary bias in pop, cases like Meta and Uber show that stressful early days can turn into big winners.
It can be boring, but it’s always safer to focus on an IPO company’s financials and fundamentals before deciding whether it’s a solid investment idea.
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Sources of the article
We rely only on vetted sources and reliable third-party reporting. For details, see our conduct and guidelines.
The Wall Street Journal (1),(3); CNBC (2),(4); X (5); University of Florida (6); Axios (7); Mathematics (8); Uber Investor Relations (9); Yahoo Finance (10); Morgan Stanley (11).
This article first appeared on Moneywise.com under the headline: Bill Ackman’s fund IPO debuts on day 1, drops nearly 20% – but first-day flops don’t always mean long-term failure.
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