Robinhood to give retail investors direct access to IPOs
In an effort to continue – as Robinhood puts it – to “democratize” retail investing, the stock trading app is expected to give amateur investors access to IPO stocks as early as next month.
Recall that in March, Robinhood was in the process of creating a new technology platform that would allow users to buy IPO stocks alongside Wall Street investors and high net worth individuals. Now, it looks like those plans have come to fruition, and retail investors can buy into newly listed companies before its shares start trading on the stock exchange.
“We are starting to roll out IPO Access, a new product that will give you the ability to buy shares of companies at their IPO price, before trading on public exchanges. With IPO Access, you can now participate in upcoming IPOs with no minimum accountRobinhood explained in a blog post on Thursday.
While Robinhood will not act as an underwriter for companies looking to enter public markets, the trading app will receive a portion of these shares through partnerships with investment banks. Robinhood’s latest move is likely to ruffle a few feathers on Wall Street, which has traditionally reaped the benefits of day one IPO gains. According to Dealogic, IPOs jumped on average 36% on the first day of trading in 2020, suggesting that demand for popular IPOs is not only high among institutional investors, but also among institutional investors. amateurs.
The traditional IPO process has come under more scrutiny in recent times. especially since investment banks generally allot shares to their high net worth clients who are then able to reap the benefits on day one. However, with the new access to Robinhood’s IPO, users of the app will be able to organize to buy shares at their initial price range, and once the official price is set, they will be able to finalize, modify or cancel their purchase.
Figs, a medical scrub company, is expected to be the first company to offer its shares to Robinhood users, after filing its documents with the SEC on Thursday. “We currently anticipate that up to 1.0% of the Class A Common Shares offered hereby will, at our request, be offered to retail investors through Robinhood Financial, LLC, as a member of the selling group. , via its online brokerage platform.Figs said, according to his S1 filing.
Although the IPO date is not yet finalized, it is typical for a company to debut in public between one and two months after its S1 filing with the SEC. In the meantime, access to Robinhood’s IPO is expected to be made available to all of its users over the coming weeks.
Information for this briefing was found via Robinhood. The author has no title or affiliation related to this organization. Not a buy or sell recommendation. Always do additional research and consult a professional before purchasing a title. The author does not hold any license.