Going public

Good afternoon, everyone. 

In today’s letter:

— Taylor Scollon

Wealthsimple is offering the chance to access IPOs at their launch price. Users of the platform can request access to purchase shares in companies going public, including SpaceX this week. Other platforms, like Questrade, offer similar products. Access to IPOs at the offer price was once a privilege reserved for much larger investors, typically investment banks or pension funds, but brokerages are in an arms race to offer earlier and earlier access to these companies. Retail traders still face some limitations, one being that they aren’t guaranteed the right to purchase any shares if demand far outstrips supply, and they’ll need to hold what they do buy for at least 90 days or be barred from accessing future IPOs. 

The case for retail investors buying IPOs is pretty weak. Across all IPOs, getting in at the offer price seems to work out pretty well. U.S.-listed IPOs see an average first-day gain of 19%. If you don’t get in at the offer price, your returns are not as strong — buying one at the first-day close and holding for three years would leave you trailing the index. Even if you do get in at the offer price, the data shows that IPOs allocating stock to retail investors “underperform contemporaneous IPOs by about 20 percentage points in the first year,” according to a 2025 study, suggesting that the very fact of retail investors having access to an IPO at the offer price may be a red flag about the company going public.

Falling home prices are about to box in a chunk of Toronto homeowners. A new Bank of Canada financial stability report estimates 9% of borrowers in the Toronto region won't qualify to refinance or switch lenders in 2027 if home prices stay this low. Nationally, that figure is 4%. The problem is shrinking equity: typical Toronto home values now sit 33% below their March 2022 peak, leaving owners owing too much relative to what their place is worth. That blocks the usual escape hatches like pulling out equity, stretching amortization, or shopping around for a better rate. Drop prices another 10% and the Toronto share jumps to 12%. Toronto's mortgage delinquency rate has already climbed 57% year-over-year, well ahead of the national pace.

New startups are launching at a rapid clip. Asset management firm Apollo says that startup formation is surging, with the number of startups launched in Q1 of 2026 nearly doubling from the same period last year. The majority of these startups have only one founder, something Apollo attributes to the increasing usefulness of AI tools, arguing that they are “making it dramatically easier for individuals to launch businesses on their own.” 

AI has crept into retirement planning, but not without reservations. Fidelity Canada’s annual Retirement Report, based on 2,000 Canadians surveyed early this year, found 26% of pre-retirees and 11% of retirees now use AI for financial planning, mostly to dig up info on investments, tax and budgeting. However, 65% of users are only "somewhat confident" in what they get back, and just 5% call AI their most trusted source. 56% say that AI rarely or never influences their financial decisions. That’s all good news for human advisors, who still crush it on trust at 88%.