Earlier this month, Robinhood Inc., a financial services firm that offers commission-free stock trading, raised $363 million in a highly successful IPO. The company’s stock trades at $10.64, after a first day market cap of $1.6 billion. All in all, the company’s market cap is double its initial fundraising valuation.
Robinhood’s IPO launch last week has raised the hackles of short sellers, who are particularly fearful of the startup’s potential to disrupt the IPO landscape by making it easier for retail investors to invest in previously inaccessible initial public offerings.
Robinhood is a trading app that allows people to buy and sell stocks without paying any commission fees. The app is known for its low trading fees, which currently start at $0.00, while other mobile brokerages charge as much as $10.99 per trade. With so much at stake, Robinhood’s prospective IPO has been met with a lot of controversy and scrutiny. With high-profile investors reportedly demanding a minimum $22 per share, the company is not short on cash and is planning to raise up to $500 million in its IPO.2021 will be the year of the IPO. After companies rushed to embrace some form of digital transformation, fueled by the Covid push, companies – especially those in the technology sector – began to plunge into the stock market in the face of positive financial results. Investing in IPOs has been something of a closed shop for decades, but Robinhood could change the investment landscape forever.
Robinhood is preparing for its own IPO in the summer of 2021 and has announced a new IPO access feature.
A statement on Robinhood’s blog reads: Most IPOs are usually for institutions or wealthier investors. The Access IPO will give regular Robinhood investors the opportunity to buy shares in the company at the IPO price.
While the advent of the Access IPO is not considered a breakthrough in retail investing, it does provide unprecedented access to IPOs for retail investors, where such investments were previously reserved for institutional investors. Robinhood has also promised that all its users will have the same chance of winning the promotion, regardless of order or account size.
Taking advantage of the IPO boom
Access’ IPO comes in the midst of a record year for IPOs worldwide. Thanks to a combination of favourable market conditions and an influx of new investment, global IPOs attracted huge amounts of money in 2021.
As the data shows, Robinhood has outperformed its competitors by creating a platform that allows small and casual investors to open accounts and trade with confidence. The app’s attempt to make IPOs accessible to these small retail investors is an important step towards making the investment landscape more inclusive.
In an effort to ensure the longevity of its IPO access feature, Robinhood recently imposed restrictions on users selling pre-IPO shares within 30 days of a company’s IPO.
This decision could pave the way for a 60-day ban on IPOs. We will not prevent you from selling the shares you received under the Access IPO program, the company said in a statement. However, if you sell IPO shares within 30 days of the IPO, it will be considered flipping and you will not be allowed to participate in the IPO for 60 days.
While this move may mean that some investors will be mere spectators to the high prices on day one, encouraging more investors to hold their assets means that more companies will try to go public with Robinhood.
In its quest to democratize the future of finance, Robinhood will offer investors a level of participation in IPOs that has never been possible before. Their consistent management of functionality shows that the investment platform has built the Access IPO for the long term.Robinhood is an app that lets you trade stocks without paying commission fees. It’s already gained a lot of popularity. According to the company, Robinhood is the fastest-growing stock trading app in the US. Robinhood has been gaining a lot of popularity in the US and recently filed for its IPO and has made some changes to the existing app. In a bid to keep the app growing and attract more users, Robinhood has created a feature that will let users trade without paying commission fees on the platform.. Read more about robinhood ipo valuation and let us know what you think.
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