The “IPO Access” program, where Robinhood customers got to buy some initial public offerings at the IPO price. The pitch to Robinhood customers, I have argued, is that the customers get to buy stock at the IPO price and thus benefit from the “IPO pop” when the stock starts trading. Instead of watching institutions buy at $100 in the IPO and then having to buy at $150 in the aftermarket, you can buy at $100 in the IPO. The pitch to IPO issuers, I have argued, is that if Robinhood customers buy in the IPO they will pump up the IPO price, so that the issuer can benefit from the IPO pop: Instead of selling to institutions at $100 and watching the stock run to $150 in the aftermarket as Robinhood customers buy it, the company can just sell directly to the Robinhood customers at $150. These pitches cannot both be entirely true.
That is oversimplified and perhaps unfair, but if you believe it then you would expect the Robinhood IPOs to perform poorly: The shares should be overpriced in the IPO, and then trade worse afterward than other, non-Robinhood IPOs. The product that Robinhood was marketing to issuers was, in some sense, price-insensitive demand. You’d expect its customers to get a worse price.
Anyway here is “Robinhood Gave Its Customers Access to IPOs That All Flopped”:
A Bloomberg analysis of the program, IPO Access, suggests it has been a flop for investors so far.
The initiative, which allowed users to buy shares of buzzy companies like Sweetgreen Inc. and Allbirds Inc. before they debuted on stock exchanges, resulted in losses for customers who still hold the shares. In an already dismal market for IPOs, those offered by Robinhood have performed even worse.
All 23 IPOs that Robinhood opened up to its customers have declined by double-digit percentages since the stocks debuted. Five — Iris Energy Ltd., Sono Group NV, Vaxxinity Inc., Stronghold Digital Mining Inc. and Argo Blockchain Plc — lost at least 89% of their value.
Well, yes, right.