There’s a lot of hype at the moment around some pending initial public offerings (IPOs). Notably, SpaceX is preparing to go public in mid-June at a potential trillion-dollar valuation, with OpenAI also in talks to list before September.

So should I keep some powder dry for these, or stick to my usual strategy with UK stocks?

Hot new stocks

One of the main lures around SpaceX and OpenAI is that both are businesses operating at the cutting edge of industries that could shape the future for decades. There is certainly a case to be made for buying the shares when they do go public.

For example, if SpaceX continues to dominate commercial launches and expand global broadband services, revenues could soar over the long term. Likewise, OpenAI could become one of the defining software businesses of the AI era. The scale of opportunity here is enormous, with companies worldwide racing to integrate AI into everyday operations.

However, investors should remember that IPOs often arrive with sky-high expectations already factored into valuations. By the time ordinary people (like me) can buy shares, much of the early explosive growth may already be reflected in the price. History shows that some heavily hyped IPOs struggle after listing because expectations become almost impossible to meet.

There are also specific risks attached to both firms. SpaceX operates in a highly capital-intensive industry where tech setbacks or failed launches could hurt investor confidence overnight. OpenAI faces fierce competition on virtually every front, with other concerns about the long-term profitability of AI models.

Long-term track records

The alternative is to stick to UK shares with a good history of delivering shareholder results. For example, consider Plus500 (LSE:PLUS). The FTSE 250 stock is up 39% over the past year, and an impressive 201% in the last five years.

The retail trading platform makes money from related commissions. The more customers trade, the more revenue the platform can generate. That’s one key reason why the company’s doing well at the moment. Higher volatility in the stock market and related markets means more opportunities to transact.

The company isn’t resting though, with expansion into different financial products, targeting a broader range of clients. This will help to diversify revenues over time and reduce dependence on a single product category. More than that, I like the outlook because of the broader shift toward self-directed investing. More people are learning about and taking an interest in financial markets too, which is a good thing for Plus500.

The big risk is regulation, with the potential for the UK and other markets to crack down on what products and leverage can be taken on my retail investors. This could hamper any potential rise in profits down the line.

On balance, I’m excited for new IPOs and will definitely keep some cash ready for them. However, this will only be a small amount, as I’d rather allocate the bulk of my money to tried-and-tested companies.

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Jon Smith has no positions in the shares mentioned.