Robinhood has introduced a new product that gives “everyday investors” the chance to purchase shares of companies at their initial public offering (IPO) price, a privilege normally reserved for wealthy or institutional investors.
The mobile brokerage app’s IPO Access tool, being rolled out gradually over the next few weeks, lets investors take part in upcoming IPOs with no account minimums, the company said in a Thursday (May 20) blog post.
With the tool, investors start by searching a list of upcoming IPOs from companies that plan to distribute shares to Robinhood. Once investors have found the companies they’re interested in, they can request to buy shares at their initial listing price range. Once the price is set, they can review, edit or cancel requests before shares are parceled out to Robinhood customers.
From there, it’s a matter of waiting. “IPO shares can be very limited, but all Robinhood customers get an equal shot at shares regardless of order size or account value,” the company said in its blog post.
Reports of this tool — or something like it — first began circulating in March. That’s when Robinhood announced plans to democratize its own IPO, with the company setting aside 13 million shares for average investors.
Robinhood could reveal its IPO filings as soon as next week, with the company looking at the end of June as its go-public date. A Securities and Exchange Commission (SEC) filing could give investors a closer look at Robinhood’s financials. A recent securities filing showed Robinhood’s payment for order flow — its greatest revenue source — more than tripled in the first quarter, reaching $331 million.
The company caused controversy when it began limiting equity trades as retail investors jumped on “meme” stocks for companies like GameStop and AMC, causing disarray on the markets.