Online finance company Social Finance Inc. will offer its customers the ability to invest in initial public offerings before negotiations begin, the company announced on Friday. Organizers traditionally reserve the IPO investment for large institutional investors or individuals with ultra-high net worth.
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“In an ongoing effort to break down investment barriers, SoFi expects to offer several IPO securities in the coming months, available to members through the SoFi app,” the company announced.
SoFi said it would give customers with more than $ 3,000 in their accounts early access to IPOs.
The online trading app Robinhood is also reportedly working on a plan to offer IPO investment. This occurs at a time when the IPO market is spawning new publicly traded companies at an unprecedented pace. This is due to special purpose procurement companies. The number of SPAC IPOs so far this year has already exceeded 248 last year.
SoFi is about to go public by merging with a SPAC called Capital Social Hedosophia. The transaction values SoFi at $ 8.65 billion.
In addition, Robinhood on Tuesday filed confidential paperwork to also go public, the company confirmed on a blog.
No access to IPO investments
Currently, retail traders have no way of investing in an IPO. They must wait until the shares start trading.
It is large institutional investors and wealthy individuals who obtain shares in an IPO at the final price, usually the night before the shares begin trading on a stock exchange such as Nasdaq. At that time, the price used to go up even more.
Highly popular IPOs jumped more than 50% or more in the IPO. However, stocks may also fall.
“SoFi recognizes that investing in IPOs is inherently risky and we are committed to clearly disclosing the risks and benefits associated with this type of investment opportunity,” said the company in its announcement.
Founded in 2011, SoFi based in San Francisco, unrelated to the UK non-profit consultancy Social Finance, initially focused on refinancing student loans. It now offers stock and cryptocurrency trading, personal and mortgage loans and wealth management services. It has more than 1.8 million members.
Follow Brian Deagon on Twitter at @IBD_BDeagon for more information on technology stocks, analysis and financial markets.
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