Retail investors on Robinhood to buy IPO shares with launch of IPO Access
Robinhood, the US stock trading app that is loved by the latest generation of stock traders and investors, has announced the launch of IPO Access which gives retail traders a chance to buy into initial public offerings (IPOs).
The general public has very limited access to buying shares through IPOs and these are generally allocated to major investors and companies. The amateur investors and traders have access to these shares only after they have started trading at the exchanges.
Robinhood seeks to bring these IPOs to the smaller traders as well by partnering with investment banks and getting a specific number of shares allocated for itself.
The users will be able to browse through the range of IPOs that are ongoing at any point in time. They can also gather more details about the IPO and the company details as well. Then they can choose the IPO that they want to invest in and the price range that they want to buy and also the number of shares. Once the prices are set, they can adjust or cancel the order as they deem fit.
Once the above is done, the users need to wait and see whether they get any of these shares allocated. Very few shares are available to the public through this method but everyone gets a shot at getting their hands on the IPO shares irrespective of the size of their account or the investment. This way, Robinhood hopes to create a level playing field for everyone.
It has to be noted that Robinhood itself is planning to go public in the near future and it remains to be seen whether the traders in Robinhood will get a chance to buy Robinhood IPO shares as well. The app has been pretty popular with the younger generation as its features have been designed in keeping amateur traders in mind.
Generally, the prices of IPO shares tend to rally during the day of listing and so far, the retail traders have been missing this action. In fact, many of the retail traders catch this action right at the top and end up losing more than they gain. All the gains are generally lapped up by the major investors and institutions leaving the retail traders to fight for the crumbs.
Now, with this, the retail traders also have a chance to make some good gains during the day of the listing and they can also participate in the market action with the stocks that they have bought.