Last week Robinhood launched a new product, IPO Access, that will allow their customers to buy shares of companies at their IPO price before trading on public exchanges. Once again Matt Levine has written best about this:
The pitch to Robinhood’s customers writes itself. In a hot IPO market, initial public offerings mostly go up. If you buy a newly public company at the IPO price, it will trade up the next morning, and you will make money. If you are a Robinhood customer, you want to make money. Also, though, you want a little bit of a gamble, something exciting, and buying shares of a newly public company is more exciting than buying shares of Apple Inc. or whatever. Also buying IPO shares is a bit of a lottery not only in that the company is new and untested, but also in that you don’t know how many shares you will get: “Watch and wait,” says Robinhood’s blog, because “IPO shares can be very limited, but all Robinhood customers get an equal shot at shares regardless of order size or account value.” You get a random amount of stock with a random value! How fun is that?
