In recent years, IPO investing has shifted from being a game of speculation to one of data-driven decisions. With artificial intelligence, particularly tools like ChatGPT, retail investors now have the power to analyze IPOs just like seasoned analysts.
In this blog, we’ll explore how smart AI prompts can help you spot high-potential IPO listings before they explode on the market—and avoid those that are likely to disappoint. Whether you’re investing for listing gains or long-term value, ChatGPT can be your research assistant.
🚀 Why Use ChatGPT for IPO Investing?
ChatGPT can:
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Read through complex IPO documents like RHPs in seconds
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Summarize financial data into meaningful insights
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Compare IPOs with listed peers
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Spot red flags investors might overlook
With the right custom prompts, you can extract valuable information that gives you a real edge. Let’s dive into specific AI prompts designed to help you assess IPOs smartly and efficiently.
✅ Prompt 1: Understand the Core Business in Simple Terms
Prompt:
“Explain the core business of [Company Name] IPO in layman’s terms. What does the company do, who are its customers, and how does it make money?”
Why It Matters:
If you can’t explain what the company does in one sentence, you probably shouldn’t invest. AI can simplify jargon-filled business models and tell you exactly how the company generates revenue.
👉 Bonus Tip: Ask, “Is this business model scalable?”
✅ Prompt 2: Rate the Industry Attractiveness
Prompt:
“Rate the industry [Company Name] operates in on a scale of 1 to 10 based on future growth potential, competitive intensity, and global trends.”
Why It Matters:
A great business in a declining industry may struggle, while an average business in a booming industry can do well. AI can synthesize market trends, demand forecasts, and industry news to provide a macro view.
👉 Follow-up: “What are the key tailwinds and headwinds for this industry?”
✅ Prompt 3: Highlight Unique Strengths and Moats
Prompt:
“What are the unique strengths of [Company Name]? Does it have any competitive advantages like IP, brand strength, or exclusive partnerships?”
Why It Matters:
High-potential IPOs typically have a moat—a reason why competitors can’t easily copy them. Whether it’s technology, patents, or network effects, this prompt helps uncover defensibility.
👉 Ask AI: “Is this advantage sustainable for the next 5–10 years?”
✅ Prompt 4: Assess Pre-IPO Financial Performance
Prompt:
“Summarize the financial performance of [Company Name] over the last 3 years. Focus on revenue, profit/loss, margins, debt, and cash flow.”
Why It Matters:
Strong fundamentals before listing are key. Look for trends like improving margins, reducing debt, and growing revenue. AI can scan financial tables and output clean, understandable summaries.
👉 Try This Too: “Is there a significant jump in performance just before IPO?”
✅ Prompt 5: Compare with Listed Competitors
Prompt:
“Compare [Company Name] with its top 3 listed competitors in terms of valuation, profitability, and growth. Highlight key differences.”
Why It Matters:
This gives context to whether the IPO is fairly priced. A company with lower earnings but higher valuation than its peers may be overhyped. Use AI to calculate valuation multiples and spot anomalies.
✅ Prompt 6: Identify Red Flags from RHP
Prompt:
“Scan the red herring prospectus of [Company Name] and list the top 5 risk factors investors should be aware of.”
Why It Matters:
The RHP is the most important document—but it’s long and full of legal language. ChatGPT can quickly summarize key risks like litigation, customer dependency, or regulatory issues.
👉 Pro Tip: Ask AI to rate each risk by impact and probability.
✅ Prompt 7: Predict Listing Day Sentiment
Prompt:
“Based on market sentiment, anchor investor interest, and grey market premium, what is the likely listing day performance of [Company Name] IPO?”
Why It Matters:
While no one can predict the future, AI can analyze inputs like social media buzz, grey market premiums (GMP), and past IPO patterns to offer a directional insight.
👉 Use this for short-term strategies like listing day trading.
📊 Putting It All Together: A Smart IPO Checklist
| Parameter | Use AI Prompt to Answer |
|---|---|
| What does the company do? | Prompt 1 |
| Is the industry growing? | Prompt 2 |
| Does it have a moat? | Prompt 3 |
| Are financials solid? | Prompt 4 |
| Is valuation fair? | Prompt 5 |
| Any hidden risks? | Prompt 6 |
| What’s the market buzz? | Prompt 7 |
✅ If most answers are positive, the IPO might be a high-potential listing.
🚫 If AI surfaces multiple concerns, you may want to wait or skip.
📌 Real-Life Example: Nykaa IPO
Let’s simulate what ChatGPT might have told you before the Nykaa IPO using these prompts:
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Core Business: Online beauty and fashion marketplace with high female user base.
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Industry: Fast-growing e-commerce segment with rising per capita spending.
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Strengths: First-mover advantage, strong brand, omnichannel strategy.
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Financials: High growth, but thin margins and growing marketing expenses.
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Valuation: High compared to global peers.
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Risks: Dependence on third-party sellers and volatile fashion trends.
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Buzz: High GMP and strong anchor book participation.
👉 Based on these prompts, the IPO showed short-term listing gain potential, but long-term caution due to valuation risks—exactly what happened.
🔍 Final Thoughts: Let AI Be Your IPO Research Partner
Gone are the days when IPO analysis required a team of analysts. With smart ChatGPT prompts, you can become your own research team, reviewing IPOs from multiple angles in minutes.
AI won’t replace your judgment—but it will supercharge it.
Use these prompts next time an IPO catches your eye, and you’ll have a smarter, sharper perspective than 90% of retail investors.