- Robinhood warns the retail investors against selling IPO shares within 30 days
- Selling of the IPO shares within the offering period is considered as “flipping”.
- Investors who sell or flip will be restricted to participate for next IPO deals.
Robinhood is a financial service company offering commission-free trading and exchanges via the application. The firm’s current project is to democratize finance for all. Recently, Robinhood introduced IPO access for the users and the investors. Moreover, the IPO access helps the users to buy shares at the IPO price as the stock starts trading in public exchanges. It also enables the company to sell and trade stock as they go public.
Robinhood IPO Access
Notably, Robinhood is the first one to introduce the new project called “IPO Access”, in March. Currently, Robinhood warns the investors not to sell their IPO shares in the first 30 days of the offering. Further, selling the IPO shares within 30 days is considered as “flipping”. Then the users are strictly restricted to participate in the next 60 days of IPO deals. Thus, Robinhood advises the investors to avoid flipping as it offers fewer IPO deals in the future.
In addition, Robinhood’s important note says,
“Most IPO shares typically go to institutions or wealthier investors. With IPO Access, everyday investors at Robinhood will have the chance to get in at the IPO price.”
Along with this, the financial firm introduced a similar program, Robinhood Rival fintech Social Finance (SoFi). The work of rival SoFi is to provide punitive measures for investors selling IPO shares. At present rival SoFi restricts and fines investors who sell IPO shares during early days of offerings.
Therefore, Robinhood is also planning to go public in 2021, reportedly filing papers with the SEC. The launch of the IPO shares is an initiative along with the part of democratizing investing.