Robinhood Markets is entering the IPO business, just a month before the company’s own anticipated debut on the stock market. The popular financial service app is known for providing commission-free trading for stocks and exchange-traded funds (ETFs). Robinhood is expanding its offerings with a new platform that will allow retail investors to buy shares in IPOs, which was formerly the exclusive territory of Wall Street funds.
The new investing platform called IPO Access will be rolled out in phases to current app users, and its IPO paperwork is expected to be available within the next few weeks. Concerning their own upcoming IPO, Robinhood reportedly plans to set aside some of their own shares to sell on IPO Access. The tech company is currently planning to go public in July, strategically timing its opening after the Independence Day holiday.
What exactly is Robinhood’s IPO Access?
In their self-published blog, Robinhood advertises IPO Access as a “chance to get in at the IPO price,” an opportunity usually reserved for “institutions or wealthier investors.” The company plans to work with Wall Street investment banks to secure shares for individual investors.
The financial app has not yet specified which stocks will be available, but the trail has already been blazed by FIGS, the recently-public maker of hospital scrubs, who became the first to reserve shares for Robinhood users, setting aside 1% of their IPO offerings. On their opening day, FIGS’ shares jumped 36% from their IPO price.
Robinhood Markets has been considered a key driver in this year’s meme stock mania. The stock market surprises of 2021, from the rise of Reddit favorites to the fall of expected high-performers, will only continue as tech companies like Robinhood aim to disrupt Wall Street and make investment more accessible to the masses.
Investors looking to take advantage of new trading opportunities should be prepared for the financial and tax implications of new stock purchases. Though successful stocks can come with hefty capital gains taxes, qualified small business stock (QSBS) is one exception to the rule. The IRS tax code allows up to 100% of capital gains from QSBS to be excluded on your tax return, as long as QSBS requirements are met. Learn more about how to invest wisely and maximize your tax savings at QSBSExpert.com.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.