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After months of negative press, Robinhood today offers good news and better news. In fact, it might be some of the best news for retail investors since Robinhood pioneered commission-free trading on its mobile app in 2013.
We'll give you the good news first: The Robinhood IPO date now looms closer than ever.
The better news is that retail investors can likely grab shares of Robinhood stock at the IPO when it comes around. Until now, this was not always the case.
Typically, retail investors would expect to get in on a stock at either much higher or lower than the IPO price. That was because, to invest in IPOs, you would have to be an institutional investor with connections to the company. Or, at the very least, you would need to be a high-value client of your broker to request IPO shares.
With the Robinhood IPO coming up, this is no longer the case. The company hinted at issuing Robinhood stock to kick off its IPO Access feature. And that just dropped onto the app yesterday.
There is one major winner available on Robinhood IPO Access so far, and it's not Robinhood. But we're holding on to hope...
Here's how you can invest in Robinhood shares, including the IPO unicorn available on Robinhood right now.
How to Buy Robinhood Stocks at the IPO Price
Robinhood went to lengths to provide its retail traders a comprehensive IPO investing experience.
The company now provides us a calendar of upcoming IPOs. Retail investors can choose one and voice their interest in buying.
To do this, you start by opening a "request" for IPO shares through the Robinhood app.
Of course, a company's valuation might fluctuate leading up to and after the IPO. So, Robinhood allows you to confirm whether or not you still want to request shares once the IPO price is locked in. If the stock has moved 20% up or down since you requested shares, Robinhood gives you a chance to re-confirm whether or not you still want to buy.
The only downside - which is no different, even if you're a wealthy institutional investor - is that there are limited shares available. For that reason, Robinhood selects requests for shares at random.
Additionally, you might request a certain number of shares and be given less. Or, you might request shares and not be given shares at all. This is because IPO shares will be limited and probably in extremely high demand. Robinhood says that the number of shares you get ultimately depends on "the number of shares we receive, customer demand, and other factors."
Before you request access, you need to confirm eligibility for IPO investing. Really, this is simpler than it sounds. You just read the checklist and confirm that you are not restricted somehow (maybe some conflict of interest or other) from buying IPOs. Then, you just click a button from there.
Again, not every IPO company will be available on Robinhood - it will only be whatever IPO shares Robinhood chooses to buy itself. Here's what you can buy as of today.
What IPO Stocks Can I Buy on Robinhood?
Since we're still very early in the game, only a single IPO stock is available for request through Robinhood IPO Access. That company is Figs, a healthcare apparel startup that will trade under the ticker FIGS.
The company goes public this week. And yes, retail investors can buy the stock even before it trades on the New York Stock Exchange. Figs has seen some success in the last year, banking $263 million in revenue, up 139% from $110 million in 2019.
The company's valuation stands at $3 billion, classifying it as a "unicorn" startup - or, a startup valued over $1 billion.
We're yet to see what stocks will be made available through Robinhood IPO access. It would be surprising if Robinhood did not offer shares of its own stock through the program eventually, ahead of its initial public offering.
If you trade on Robinhood, be on the lookout for any new IPOs that pop up. IPO investing creates more opportunity for big profits.
For example, Snowflake Inc. (NASDAQ: SNOW), one of the biggest software IPOs of all time, was priced at $120. Today, Snowflake stock trades for $230. An IPO investor will have nearly doubled their investment today, a 91% return.
IPO investing used to be for professional traders and industry big-wigs. Now, we're quite a big step closer to par with them.
This follows a span of months in which retail traders were unhappy with Robinhood for halting trading of GameStop Corp. (NYSE: GME), AMC Entertainment Holdings Inc. (NYSE: AMC), and others. But here, Robinhood might live up to its name again.
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About the Author
Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.