Online trading platform Robinhood has revealed plans to give retail investors the opportunity to buy shares in initial public offerings, an opportunity normally only afforded to institutions and wealthier investors.
Usually retail traders, who don’t have a vehicle to buy into newly listed companies, have to wait until the shares begin trading on an exchange, often missing out on the best price. But the move by Robinhood looks set to change that.
“We’re starting to roll out IPO Access, a new product that will give you the opportunity 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 account minimums,” the company said in a post on their blog.
The popular fintech startup is preparing to launch its own IPO shortly, has a stated mission to ‘democratize’ finance. Unlike other companies offering IPO access, Robinhood will set no minimum account balance or any other qualifying requirement. The company’s blogpost promises to give all users an equal shot at buying shares, regardless of account size.
Using the IPO Access platform, Robinhood clients will be able to request shares at their initial listing price range. Once the final price is set, they will be given the choice to change, cancel or complete the purchase. There will be no charge to customers for this service, as Robinhood will collect fees from the underwriters.
The first company set to offer its shares on the new platform is FIGS, a California firm that sells fashionable medical scrubs. It is understood that about 1% of FIGS class A common stock will be available for purchase by Robinhood clients.