Manage episode 294427652 series 2851541
Robinhood will give retail investors access to IPO shares. Robinhood announced last week that they are building a platform to “democratize” initial public offerings, including their own, that would allow users of its trading app to buy shares alongside Wall Street funds.
The move could erode Wall Street’s grip on stock market flotations. It would be easier to implement for Robinhood’s own IPO, given how companies and their investment bankers tightly control allocations to investors in new listings.
Currently, Robinhood users and other amateur traders cannot buy into stock of a newly listed company until its shares start trading. Since shares often trade higher when they debut, big funds that get allocations in the IPO have an advantage. The average first-day trading pop on U.S. listings of businesses in 2020 was 36%.
The FIGS IPO was the first one to be sold directly to retail investors through Robinhood's online brokerage platform.
Robinhood plans to carve out a chunk of its shares on offer in its IPO for its 13 million users, and to use technology it is building to administer this part of the offering, the sources said.
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