Can you lose money on Japanese IPOs?

Yes — but the losing patterns are predictable

The basic IPO play is simple: win the lottery, buy at the offer price, sell at the first traded price. Played this way, you lose money in exactly one case — when the first traded price comes in below the offer price. In Japan this is called kōbo-ware, an IPO 'breaking issue'.

So the honest answer is yes, you can lose. But unlike most of investing, the failure modes are few and well understood. Knowing them is most of the defense.

Real examples of IPOs that broke below the offer price

Mirrativ (listed December 2025) was offered at 860 yen and opened at 751 — a loss of 10,900 yen on the minimum 100-share lot, or about -12.7%. TO Books (February 2026) went from 3,910 to 3,595, a 31,500-yen loss (-8.1%). Tier IV (July 2026) went from 1,085 to 1,009, down 7,600 yen (-7.0%).

Breaks are not rare. A meaningful minority of listings open below the offer price, and this happens in ordinary markets, not just crashes.

Compare the other direction, though: Batonz (April 2026) was offered at 660 yen and opened at 1,674 — a gain of over 101,000 yen on one lot. This asymmetry is the whole appeal of the strategy: when it goes wrong you typically lose around ten percent, and when it goes right the upside can be a double or more. But the small typical loss is a tendency, not a guarantee — in a bad market a break can go deeper.

The uncomfortable rule: easy wins are risky wins

Allocations are rationed by demand. A wildly popular IPO is nearly impossible to win, precisely because everyone wants it; an unpopular one is easy to win, precisely because informed applicants stepped aside.

So an allocation that comes surprisingly easily should make you a little suspicious, not just happy. Before applying, look at a listing's demand picture — market, size, business — rather than treating every IPO as an automatic yes.

Where the big losses actually happen

Buying after listing. Chasing a hot IPO at or above its first traded price is the single most dangerous move for a beginner. The first price is often the peak of the festival, set by lottery winners selling into maximum excitement.

Holding instead of selling. Keeping your allocation after listing is a legitimate choice, but understand that at that moment you stop doing 'IPO investing' and start doing ordinary stock picking, with all its risks.

Administrative own-goals. Missing a purchase deadline after a waitlist promotion, or declining a win at a broker that penalizes it — these losses have nothing to do with the market and are entirely avoidable.

Habits that keep losses small

Do not apply to everything. Check a listing's popularity and forecast first, and be willing to skip the ones that look likely to break. Applying is never an obligation.

Sell at the first price by default. Decide in advance what would make you deviate, rather than improvising while watching the ticker.

Prefer brokers that require no deposit at application. Then a skipped IPO costs you nothing, and your cash is never locked up waiting on a lottery you probably will not win.