Many investors dream of getting in early on the next Amazon. That’s part of the appeal of initial public offerings, or IPOs, which allow investors to buy shares of a company as it enters the public market. With growing interest in potential future IPOs from companies such as SpaceX, Anthropic and OpenAI, here’s what investors should know.
What is an IPO?
An IPO is the process where a private company becomes publicly traded by offering shares to investors. Once the IPO is complete, the company’s stock begins trading on a public exchange such as the New York Stock Exchange (NYSE) or Nasdaq.
Companies typically go public to raise capital that can be used to fund growth, pay down debt or support other business goals. An IPO can also provide liquidity for early investors, founders and employees by allowing them to eventually sell some of their shares.
Before trading begins, the company and its underwriters set an IPO price for the shares being offered. After the stock starts trading, its market price can rise or fall based on investor demand, company performance and just overall market conditions.
How to invest in an IPO
There are generally two ways to invest in an IPO: purchasing shares before trading begins or buying the stock once it’s publicly traded.
Before trading begins
Some investors can participate in an IPO before a stock starts trading on a public exchange.
This is when shares are offered at the IPO price to institutional investors, such as mutual funds, hedge funds and pension funds, as well as a limited number of retail investors through participating brokerages. These brokerages work with the investment banks underwriting the IPO and receive a limited allocation of shares. According to Fidelity, roughly 90% of IPO shares are typically allocated to institutional investors, while only about 10% go to individual investors. It’s worth noting, however, that IPO allocations vary by deal and this 90/10 split certainly isn’t always the case. Interested investors may also need to meet certain eligibility requirements to participate.
Even if your brokerage offers IPO access, receiving shares isn’t guaranteed. To participate, you’ll typically need to submit an indication of interest (IOI), which is a nonbinding request that indicates how many shares you’d like to purchase at the IPO price. The brokerage determines whether or not you receive shares and, if so, how many. In high-profile IPOs, demand can exceed the number of shares available, which means you may receive only a portion of the shares you requested, or none at all.
Once the stock is publicly traded
While not everyone can buy shares at the IPO price, virtually anyone with a brokerage account (like those below) can invest once a stock begins trading on a public exchange.
On IPO day, shares start trading on the open market, and investors can buy and sell them through their brokerage just like they would with any other publicly traded stock.
A key difference between the before- and after-trading phases is pricing. The IPO price, also known as the offer price, is set before trading begins, while the after-trading market price is determined in real time by supply and demand. For example, if a company prices its IPO at $50 per share, eligible investors who receive allocations may buy at that price. But once trading begins, the stock could open higher or lower depending on investor demand.
Best brokers for IPO access
Brokerages that offer access to IPOs may have eligibility requirements that investors must meet before participating. Availability can vary by firm and by offering, so it’s important to confirm details directly with your brokerage. In some cases, the Financial Industry Regulatory Authority (FINRA) has additional regulatory restrictions that may also apply.
Once a company begins trading publicly, these same brokerages can also be used to buy and sell shares on the open market like any other stock.
SoFi offers access to IPOs before they’re public. Any SoFi member with an Active Investing account is eligible to participate and there are no minimums. SoFi considers the number of shares you’re requesting to purchase and your total SoFi account value when deciding how to divvy up the available shares among its members. SoFi Plus members get preferred IPO access.
SoFi Invest®
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active or automated investing, or to participate in IPOs. $5 minimum to own a fractional share of a company.
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Fees
Fees may vary depending on the investment vehicle selected. Active investing has zero commission fees for trading stocks and ETFs (exchange and fund management fees may apply). Automated investing has zero management fees
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Bonus
Get up to 1,000 in stock when you open & fund a new Active Invest account.
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Investment vehicles
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Investment options
Stocks, ETFs, options, mutual funds, alternative funds, fractional share and IPO participation
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Educational resources
SoFi offers a detailed help center with hundreds of searchable articles, market insights and access to certified financial planners at no additional cost to all members.
Pros
- $0 minimum deposit for active, automated investing and IPO participation
- Ability to purchase fractional shares ($5 minimum) and participate in IPOs before they trade on the public market
- Commission-free trading on stocks, ETFs and options (including no per-contract options fees)
- No management fees for automated investing
- Variety of bonuses being offered
- All members get access to certified financial planners at no extra cost; SoFi Plus members get unlimited sessions
- 1% match on eligible IRA contributions and rollovers
Cons
- Minimums required for fractional shares ($5)
- Exchange and fund management fees may apply with active investing
- $25 annual inactivity fee (waived if you log in at least once every six months)
- No tax-loss harvesting for automated investing
*Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease.
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC
Automated investing is offered through SoFi Wealth LLC, an SEC-registered investment adviser.
Robinhood’s “IPO Access” randomly allocates shares to eligible brokerage customers and no fees are added; selected customers just pay for the shares they are allocated at the IPO price. Accounts not allowed to participate in IPOs via Robinhood include retirement accounts, joint accounts and managed accounts.
Robinhood
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum required to open an account or to start investing
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Fees
Fees may vary depending on the investment vehicle selected. Commission-free trading; regulatory transaction fees and trading activity fees may apply
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Bonus
Get a free stock added to your brokerage account when you link your bank account and fulfill the promotion conditions (keep it or sell after 2 trading days)
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Investment vehicles
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Investment options
Stocks, ETFs, options, fractional shares, IPOs, and select cryptocurrencies Robinhood Crypto (availability varies by location)
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Educational resources
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Terms apply. *(Review Robinhood disclosureshere.)
Pros
- $0 minimum deposit to open an account and start investing immediately
- Commission-free trading on stocks, ETFs, options and crypto
- Get a free stock just for linking your bank account
- Access to fractional shares (own a piece of stock for just $1)
- Beginner-friendly app with built-in educational content
Cons
- No human advisor or managed portfolio option
- Fees outside of commissions may apply
In order to qualify to request to participate in an IPO, Fidelity customers must have at least $100,000 in retail assets to participate in traditional IPOs or at least $500,000 for IPOs through underwriter relationships, or they’re a part of the Fidelity Private Client Group®.
Fidelity Investments
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open a Fidelity Go® account, but minimum $10 balance for robo-advisor to start investing.
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Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF, options trades and some mutual funds; zero transaction fees for over 3,400 mutual funds; $0.65 per options contract. Fidelity Go® has no advisory fees for balances under $25,000 (0.35% per year for balances of $25,000 and over, which includes access to unlimited 30-minute coaching calls with a Fidelity advisor and tax-loss harvesting on taxable accounts).
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Bonus
None currently. Check Fidelity’s promotions page for the latest offers here.
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Investment vehicles
Robo-advisor: Fidelity Go® IRA: Traditional, Roth and Rollover IRAs Brokerage and trading: Fidelity Investments Trading Other:Fidelity Investments 529 College Savings; Fidelity HSA®
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Investment options
Stocks, bonds, ETFs, mutual funds, CDs, options and fractional shares
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Educational resources
Extensive tools and industry-leading, in-depth research from 20-plus independent providers
Pros
- No commission fees for stock, ETF, options trades
- No transaction fees for over 3,400 mutual funds
- Fidelity Go® portfolios use Fidelity Flex® mutual funds with zero expense ratios
- Human advisors manage day-to-day Fidelity Go® portfolio decisions
- Unlimited 30-minute coaching calls with a Fidelity advisor for accounts of $25,000 and over (at no extra cost)
- Tax-loss harvesting available on taxable Fidelity Go® accounts with $25,000 or more
- Abundant educational tools and resources with research from 20-plus independent providers
- 24/7 customer service
- Over 100 brick-and-mortar branches across the U.S. for face-to-face support
Cons
- Fidelity Go® has a 0.35% advisory fee per year for balances of $25,000 and over
- Fidelity Go® invests only in Fidelity Flex® mutual funds (no third-party ETFs or individual securities available)
- No socially responsible or ESG portfolio option through Fidelity Go®
- Some of Fidelity’s mutual funds require reaching specific thresholds
- Reports of platform outages during heavy trading days
Charles Schwab
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No account minimum for active investing through Schwab One®Brokerage Account. Automated investing through Schwab Intelligent Portfolios® requires a $5,000 minimum deposit
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Fees
Fees may vary depending on the investment vehicle selected. Schwab One®Brokerage Account has no account fees, $0 commission fees for stock and ETF trades, $0 transaction fees for over 4,000 mutual funds and a $0.65 fee per options contract
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Bonus
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Investment vehicles
Robo-advisor: Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ IRA: Charles Schwab Traditional, Roth, Rollover, Inherited and Custodial IRAs; plus, a Personal Choice Retirement Account® (PCRA) Brokerage and trading: Schwab One®Brokerage Account, Brokerage Account + Specialized Platforms and Support for Trading, Schwab Global Account™, Schwab Organization Account and Schwab Trading Powered by Ameritrade™
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Investment options
Stocks, bonds, mutual funds, CDs and ETFs
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Educational resources
Extensive retirement planning tools
Pros
- $0 minimum deposit for active investing
- No commission fees for stock and ETF trades and no transaction fees for over 4,000 mutual funds
- Offers extensive retirement planning tools
- Users can get on-demand advice from a professional advisor/Schwab expert
- Robo-advisor Schwab Intelligent Portfolios® available as a no-fee automated service option (with Premium version available for a fee)
- Award-winning thinkorswim®trading platforms and all their cutting-edge tools are now available at Schwab.
- 24/7 customer support access by phone or chat
- Charles Schwab offers over 300 brick-and-mortar branches across the U.S. for in-person support
Cons
- Specific transactions may require commission fee
- Robo-advisor Schwab Intelligent Portfolios Premium charges a one-time planning fee of $300, then a $30 per month advisory fee. For that price, you get unlimited 1:1 guidance from a CFP, interactive planning tools, plus a personalized roadmap for reaching your goals
E*TRADE
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. No minimum to open an E*TRADE brokerage account; minimum $500 deposit to invest in robo-advisor platform Core Portfolios.
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Fees
Fees may vary depending on the investment vehicle selected. Zero commission fees for stock, ETF and options trades; zero transaction fees for over 4,400 mutual funds; robo-advisor Core Portfolios charges 0.30% annual advisory fee
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Investment vehicles
Robo-advisor: E*TRADE Core Portfolios IRA: E*TRADE Traditional, Roth, Rollover, Beneficiary, SEP and SIMPLE IRAs, IRA for Minors and E*TRADE Complete™IRA Brokerage and trading: E*TRADE Trading Other:E*TRADE Coverdell ESA (Education Savings Account), Custodial Account for minors and small business retirement plans
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Investment options
Stocks, bonds, mutual funds, CDs, ETFs, options and futures
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Educational resources
Educational library includes in-depth articles and videos for any type of investor; access to Morgan Stanley research and institutional-grade market insights following E*TRADE’s acquisition.
Pros
- No commission fees for stock, ETF and options trades
- No transaction fees for over 4,400 mutual funds
- Core Portfolios offers automated investing with a choice of standard, socially responsible (ESG), smart beta and tax-sensitive portfolio strategies
- Tax-loss harvesting available through Core Portfolios at no additional cost
- Backed by Morgan Stanley’s institutional research and wealth management resources
- E*TRADE Coverdell ESA helps you save for college early on
- Active traders receive volume discounts on options
- Free analyst research and investing tools
- Strong mobile platform with Power E*TRADE for advanced trading
Cons
- Core Portfolios requires $500 minimum to enroll and charges 0.30% annual advisory fee
- No access to certified financial planners through Core Portfolios
- No forex trading
- Website can be cumbersome to navigate
Risks of investing in IPOs
IPOs can be exciting investment opportunities, but they also come with significant risks. Newly public companies tend to generate a lot of media attention and hype, which often leads to sharp price swings and more volatility. It’s important than investors focus on their long-term investment strategy.
Investors who receive IPO allocations through a brokerage may also face restrictions on selling their shares. Selling IPO shares shortly after purchase is called “flipping,” and many brokerages prohibit it.
Company insiders and early investors are typically subject to lock-up periods, usually lasting 90 to 180 days, during which they cannot sell their shares. There’s also no guarantee that an IPO will be successful. Some stocks surge on their first day of trading, while others fall below their IPO price and never recover.
Before investing, consider whether committing money to an IPO aligns with your broader financial goals. If your IOI is accepted, you’ll need cash available to complete the purchase. It’s also wise to view the company’s prospectus, or S-1 filing, which outlines the actual business, its financial performance and key risks.
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Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Initial Purchase Requirements
Minimum initial purchase requirement of $10,000
Minimum account balance of $25,000
Account set-up fee of $50. Storage fees of $100 or $15, depending on storage type. Annual account administration fee of $125. Terms apply.
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