The recent plunge in Moore Threads has poured cold water on the current A-share IPO frenzy. Especially for those eyeing tech IPOs, it’s time to pause and think—what’s really going on behind the scenes?

Lately, tech companies have been flocking to go public, and Moore Threads is just the appetizer. Big names like Muxi, Unitree, CXMT, and YMTC are all lined up. But look at how Moore Threads played out: on the first day, the price shot straight to the ceiling, short-term traders couldn’t find an entry point, and more cautious investors were just watching from the sidelines. The result? Opened high, closed low, and left a bunch of people stuck at the top.

This is worth pondering. It’s not that tech stocks are no good, but the valuations have gone off the rails. Some companies did benefit from product shortages, but their stock prices have outpaced their actual performance. Isn’t that just pulling forward several years of future growth? When a bubble gets too big, it’s bound to burst.

For those upcoming IPOs, what’s the biggest trap investors should watch out for? One word—mismatch. When valuations and actual value don’t line up, that’s the biggest pitfall.

Forget about P/E ratios—they’re useless for new tech IPOs. Most of these companies are still burning cash on R&D, profits? Not a thing. The real metric to look at is the price-to-sales ratio—measuring valuation against sales revenue.

For example, say a company has annual sales of 300 million, but its valuation is higher than peers with 1 billion in annual sales. Does that make sense? Clearly, the bubble is already inflated and will burst sooner or later. If you miss out on the IPO allocation, just let it go—don’t chase the stock afterward, or you’ll end up being the bag holder.

So, if you want to play tech IPOs, keep a clear head: it’s fine to try your luck in the lottery, but if you don’t get an allocation, walk away. Don’t get swept up by the opening day hype—chasing after the rally isn’t investing, it’s gambling on sentiment. Once the hype fades and valuations normalize, you’ll be the one left holding the bag.

Really want to get involved? Fine, do your homework first. Take the sales figures of the upcoming companies and compare them to similar listed companies. The numbers will tell you if the valuation makes sense. Only when valuation matches performance (sales) is it worth considering. Otherwise, no matter how hot the story is, it’s just a party for someone else.

This wave of tech IPOs does bring opportunities, but even bigger risks. The lesson from Moore Threads is right there, and the valuations for those upcoming star IPOs probably won’t be cheap either. What ordinary investors need to do isn’t blindly chase trends, but stick to their principles—if you don’t understand it, stay out; if you can’t see it clearly, don’t act. The market never lacks opportunities, but once you lose your capital, it’s gone for good.