Robinhood wants you to buy Robinhood shares in Robinhood

Robinhood Markets Inc. wants its users to buy shares. The online brokerage itself, that is.

The popular stock trading app plans to reserve up to 35% of the shares in its next initial public offering for individual investors, according to people familiar with the matter, a much higher retail allocation than in a typical trade. Robinhood wants people to sign up to buy shares on their new platform that gives users access to IPOs before they go public.

Robinhood’s IPO is shaping up to be the biggest proof yet of a notion that is gaining traction on Wall Street: the day-to-day investor should play a bigger role in the IPO market. Robinhood rivals SoFi Technologies Inc. and social media and investment app Public Holdings Inc. are launching their own IPO access platforms to harness the new power and enthusiasm of the everyday investor.

The timing is not an accident. The new listing market is on its way to its busiest summer in years. The companies have sold more than $ 190 billion worth of shares in US-listed IPOs so far in 2021, according to data provider Dealogic, already exceeding the record total for 2020.

The new platforms are a new twist on an old idea that never got off the ground. For all the influence hobby investors have over the stocks of memes like GameStop Corp. and AMC Entertainment Holdings Inc., they have largely been shut out of the IPO party. Companies tend to allocate less than 10% to individual investors, according to brokers, and much of that supply is absorbed by wealthy, well-connected clients of banks. (There are some notable exceptions: Facebook Inc. sold about 25% of its IPO shares to individual investors when it went public in 2012).

Source: WSJ

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