Online finance start-up SoFi announced recently that it is offering retail investors a way to invest in initial public offerings (IPO) for companies going public, breaking the tradition for IPOs to be saved exclusively for institutions and ultra-wealthy investors.
For these deals, SoFi will act as the underwriter, meaning that it will work with companies planning to go public to determine a share price, buy the securities, and then sell them to the retail investor. SoFi will be offering this service to all SoFi Active Invest account holders with at least $3,000 in total account value across all SoFi accounts.
Before SoFi's new service, retail traders would have to wait to invest in newly listed companies after shares began publicly trading on a stock exchange. By that time, the share price is often much higher than the IPO.
Separately, trading app Robinhood, which is also popular among amatuer investors, is working on a similar trading platform to offer users access to IPO investing, according to Reuters.
Speaking of IPOs, the week ahead is sparse, with only two traditional IPOs looking to price amid the shortened holiday week.
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