‘Extremely stupid’: Zerodha’s Nitin Kamath warns against blind pre-IPO frenzy fueled by unlisted market boom

Zerodha founder and CEO Nitin Kamath has issued a stark warning to retail investors caught up in the speculative FOMO (fear of missing out) gripping India’s unlisted market. In a candid post on X, Kamath said the ongoing IPO frenzy has sparked a wave of “extraordinarily stupid” behavior, with buyers blindly chasing so-called pre-IPO shares in the hope of outsized listing gains.

Flagging the valuations given to many IPO-bound companies, Kamath said these shares trade at a 100-500% premium and many of the recent listings have been big disappointments.

“Given how hot the IPO market is, I’ve been hearing some incredibly stupid stories from the unlisted market. People are blindly buying so-called “pre-IPO” companies that they’ll make more than during the actual IPO. Greed is causing people to ignore some hard realities: These stocks have already come up with 50% 000 marks. Commissions, and terrible prices? There are numerous cases where people bought shares in the unlisted market for less than they bought. were gone,” said Kamath.

Marveling at the speed and scale at which unlisted stocks have become popular, the Zerodha founder shared how one platform was bombarding investors with WhatsApp messages.

“I honestly didn’t expect the unlisted share space to become so popular. Colleagues showed me a platform that sends out WhatsApp blasts promoting this content. It’s kind of crazy what’s happening there,” Kamath said.

Kamath has long been vocal about the need for better financial awareness among Indian investors. His latest warning comes amid a red-hot primary market where strong listings have fueled a new wave of speculative activity – particularly in the opaque, lightly regulated world of unlisted shares.

His message to investors is a warning against FOMO overriding common sense.

In his latest tweet, Kamath also warned investors against the risks associated with cryptocurrency derivatives trades. Likening it to Schrödinger’s cat, Kamath said exchanges exist in a regulated state – neither fully regulated nor unregulated and investors run the risk of going bust. It also explains why it might be in the platform’s interest if traders trading on it lose money.

Also Read: Zerodha’s Nitin Kamath flags the risks in crypto F&O, explaining why it might be in the platform’s interest if traders lose money

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