Are you wondering how to get in on the ground floor when investing it initial public offerings?
Well in this video, we’re going to be taking a look at Robinhood’s recently launched
IPO Access platform and how it works.
Hey everyone, this is Kyle from Money@30 and on this channel we look at personal finance
from a Millennial perspective including app and tool reviews like this one.
At the time that I’m recording this, the controversial stock trading app Robinhood
is readying for its initial public offering.
Coincidentally, the company recently debuted an IPO Access platform that allows customers
to request shares of upcoming IPOs — including their own.
So how does IPO Access work?
Let’s take a look at a few things you need to know.
The first thing to know about Robinhood’s IPO Access platform is that you can view upcoming
public offerings by visiting the IPO watchlist
The easiest way to see what companies are planning public offerings that you can request
to buy shares of is to first head the Browse section of the Robinhood app.
From there, tap IPO Access under Trending Lists and you can scroll through current options.
Additionally, if you’re curious about IPOs that have recently occurred, you can tap Past
and select a listing to explore how the stock has performed since hitting the market.
Back to the upcoming listings, by selecting a company, you can access additional info
about the IPO such as the prospectus and even so-called roadshow materials along with when
the IPO is expected to take place.
Next, in order to request IPO shares, you’ll need to confirm your eligibility, including
agreeing to Robinhood’s flipping policy
If you see an IPO that you’d like to attempt and purchase shares for, you can tap the “I’m
interested’ button on the listing.
However, before you can get to the part where you actually request the shares, you’ll
need to verify you’re eligibility.
This includes confirming that you're not a restricted person as dictated by FINRA rules
and understand the additional risks that come with IPO investing.
You’ll also need to agree to Robinhood’s flipping policy may penalize users who sell
IPO shares within 30 days of the public offering, restricting offending users from future IPO
access.
After this, Robinhood will also give you a rundown of how allocation works, but we’ll
cover that in a bit.
Once you’ve completed these steps, you’ll be ready to begin your request.
When requesting shares, you can either select to stick with the price range or name your
own price Prior to a company setting a final share price
for their IPO, they’ll typically offer an estimated range they’re targeting… even
though they may go above or below that.
For example, at this time, Robinhood’s own IPO has a set price range of $38 to $42 per
share.
To account for this and help ensure customers are covered, the app will allow you to submit
your request using the higher number in the price range plus a 20% buffer.
So, for my $HOOD order, the $42 range plus 20% came to $50.40 per share.
If the final price comes in above number, I’ll need to resubmit and confirm I’m
still interested.
Alternatively, you can also state the top price you’re willing to pay per share.
This can be above, below, or fall somewhere in the current price range.
Note that this option is only available before the final price is revealed - after that,
you can either submit a request at the final price or place a limit order for when the
shares hit the market.
Regardless of which route you take, you can edit your request up until 11:59 pm, Eastern
time the night before the IPO
Finally, when it comes to distribution of shares, it’s important to remember that
it’s only a request and your order may not be filled
According to Robinhood, since IPO shares may be limited, they are dolled out randomly on
the morning of the public offering.
This is to say that the total shares available and the demand for said shares will definitely
impact your ability to have your request filled.
Meanwhile, other factors such as the number of shares you’re requesting, how long you’ve
had a Robinhood account, the size of your robinhood portfolio, or whether you have Robinhood
Gold will not play a role in selecting which users ultimately have the chance to buy IPO
shares.
Overall, I do appreciate how easy Robinhood’s IPO Access platform is to use and I’m interested
to see if my request is fulfilled.
Meanwhile, if you’re completely out on Robinhood, there are other free services offering similar
IPO stock opportunities.
Despite being lukewarm on wanting to even buy shares of Robinhood, I decided to put
in a request for 2 shares just to see what happens.
Of course, given the app’s missteps, I’m well aware that there are those who not only
don’t want to invest in Robinhood but don’t want to invest with them either.
If that’s you, I should note that SoFi Invest recently debuted a similar IPO shares feature,
although you’ll need to have at least $3,000 between your SoFi investment accounts in order
to be eligible for that feature.
In any case, if nothing else, I think it’s safe to assume that we’ll be seeing more
platforms like IPO Access roll out to retail investors very soon.
Hopefully this gives you a better idea about Robinhood IPO Access is all about but for
more on the feature and the app in general, I’ll have links to my full written reviews
in the description box down below.
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So thanks again for watching and I will see you next time here on Money@30.