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Menlo Park’s Robinhood to allow users to buy into IPOs ahead of its own market debut

Robinhood Market Inc., the Menlo Park, California-based online brokerage firm, had unwrapped a new platform later this week aimed at providing retail traders with an opportunity to purchase shares in Initial Public Offerings (IPOs), a particular market domain which has long been an exclusive item for large Wall Street institutional investors.

In point of fact, Robinhood, the popular brokerage start-up that has been the centrepiece of a Reddit stock discussion group-led retail buying frenzy that seemingly had succumbed a swathe of Wall Street institutional investors into losses multiple times earlier this year by overloading ‘buying’ positions on so-called meme stocks such as Gamestop and AMC Entertainment which had been heavily shorted by institutional traders, appears to have launched a new investing platform ahead of its own Initial Public Offerings (IPO) in a bid to “democratize” finance, a rare quest which often causes a chilling effect for Wall Street’s institutional investors.

Robinhood to allow retail trades to buy into IPOs

On top of that, as Robinhood has unveiled its new platform IPO Access later this week, sources familiar with the subject-matter were quoted saying that the brokerage firm would set aside some of its own initial offerings for sale on the platform.

Meanwhile, addressing that a number of retail traders could not put their hands on shares at IPO tags and had to purchase them at higher prices following an initial jump, Robinhood said in a blog post, “Most IPO shares typically go to institutions or wealthier investors.

With IPO Access, everyday investors at Robinhood will have the chance to get in at the IPO price,” adding that the brokerage firm would work in line with Wall St. investment banks to get allocations for its retail investors.

The average jump of new shares on US public market debut, had been 36 per cent last year, data from Dealogic had unveiled.