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Robinhood has unveiled a new service that will allow investors to buy a company’s stock at its IPO price, before it hits the open market

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  • A new Robinhood service will allow investors to purchase shares at the IPO price before listing.
  • It will allow day traders to invest in IPOs alongside institutions and wealthier investors.
  • Robinhood is aiming for its own public listing in late June.

The investing app Robinhood is rolling out a service that it says will democratize initial public offerings for everyday investors.

The service, called IPO Access, launched Thursday and will roll out to all customers over the coming weeks, according to a press release. The app will allow Robinhood users to buy shares of companies at the IPO price, before the stock starts trading on the open markets.

“Most IPO shares typically go to institutions or wealthier investors,” Robinhood said in its release. “With IPO Access, everyday investors at Robinhood will have the chance to get in at the IPO price” with no account minimums.

“Here’s to democratizing IPOs for all!” the release said.

Robinhood – which had 13 million users at the end of 2020 – said the service would allow investors to discover upcoming IPOs, read financial documents, request to buy shares at the initial listing price range, and then edit or cancel the request when the final price is set. The company said IPO shares “can be very limited” but all Robinhood customers could get an equal shot at them.

The medical scrubs-maker Figs Inc. will be the first company to offer shares to Robinhood. In its IPO filing, the company said it would offer up to 1% of its stock to traders on the app.

The popular trading app is planning to reveal filings for its own IPO as soon as next week after confidentially filing for one in March. The company is hoping to make its public debut in late June, according to a report from Bloomberg. Robinhood declined to comment to Insider about its IPO.

Companies have been going public at a record pace since last year. Among the hundreds of businesses that have gone public are the dating-app Bumble, vegan milk-supplier Oatly, home-sharing site Airbnb, and food-delivery service DoorDash.

The rise in public listings, according to one Insider analysis, has been partly fueled by day traders using apps such as Robinhood.

Robinhood came into the spotlight this year when Reddit day traders caused GameStop’s share price to skyrocket, forcing a squeeze on short-sellers. The app, which has been criticized for making investing too game-like, came under scrutiny by users and even Congress when it paused trading for GameStop and other meme stocks.

Source: Business Insider

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