Robinhood Markets Inc is building a platform to “Democratize” initial public offerings, including its own, that would allow users of its trading app to snap up shares alongside Wall Street funds, according to people familiar with the matter.
Currently, Robinhood users and other amateur traders cannot buy into stock of a newly listed company until its shares start trading.
More novel are Robinhood’s ambitions to let users directly buy into IPOs of other companies.
Robinhood could have leverage in these negotiations by arguing it would be acting as a bridge between the IPO and a major pool of investor demand, the sources added.
Robinhood said its clearinghouse forced it to place the curbs because it lacked sufficient capital to settle the trades.
On Tuesday, Robinhood announced it had confidentially filed paperwork with the U.S. Securities and Exchange Commission for its IPO. While the company has yet to disclose details, the offering could happen in coming weeks and value Robinhood at up to $50 billion, the sources said.
Robinhood’s plans to let amateur traders buy into IPOs represent the latest attempt by Silicon Valley firms to disrupt the traditional IPO. A number of companies, including Slack Technologies and Palantir Technologies Inc, have listed directly without using investment bankers.