Robinhood Markets (HOOD -2.63%) as a springboard for new offerings is showing signs of life again. A pair of debutantes made shares available to Robinhood users on Thursday as part of the trading exchange's IPO Access platform.
Brilliant Earth (BRLT -3.60%) is a an online jewelry retailer specializing in ethically sourced engagement rings and other big-ticket jewelry items. It's growing. It's profitable. It had to price its IPO at $12 (below its initial pricing range), but it was a hit on Thursday. Brilliant Earth opened at $13, climbing 43% higher to close at $17.12 by the closing bell.
Argo Blockchain (NASDAQ:ARBK) rose a more modest 12% for its Thursday trading debut. True to its name, Argo is a London-based data center that's mining for crypto. Revenue more than doubled last year, and Argo is also now profitable. It joins Brilliant on Robinhood's platform providing its users with access to shares of new stocks at IPO prices.
Image source: Getty Images.
That new-stock smell
Robinhood's IPO Access launched in May, just as fashion-forward medical scrubs maker Figs (FIGS 1.48%) hit the market. It's only fair that Robinhood would try to get its users a ground-floor opportunity with new stock offerings. It jibes with its "democratize finance for all" mission statement.
You wouldn't expect winning IPOs to be drawn to Robinhood. Underwriters have no problem finding prized clients hungry for hot debutantes. Robinhood users are young and typically not high rollers. They're also generally pretty trigger-happy with their portfolios, explaining why options and crypto trading account for the lion's share of its revenue.
If you think that only duds wind up on IPO Access -- and that Thursday's strong debut for Brilliant Earth and Argo Blockchain is a fluke -- think again. Nine stocks (including Thursday's pair) have allocated a chunk of IPO shares to Robinhood users, and seven were holding up pretty well through Thursday's close.
| IPO | Date | Investors | Return (Decline) |
|---|---|---|---|
| Figs | 5/27/21 | 18,453 | 79% |
| Clear Secure (YOU -2.90%) | 6/30/21 | 43,104 | 43% |
| F45 Training (FXLV) | 7/15/21 | 78,250 | (13%) |
| Outbrain (OB 0.74%) | 7/23/21 | 55,698 | (21%) |
| Duolingo (DUOL -2.39%) | 7/28/21 | 12,602 | 99% |
| Robinhood Markets | 7/29/21 | 301,573 | 21% |
| Riskified (RSKD -1.02%) | 7/29/21 | 46,500 | 24% |
Data source: Robinhood IPO Access.
IPOs are notorious minefields, but for seven of the nine stocks that have made their shares available through Robinhood's IPO Access, the average gain through Thursday's close is an impressive 32%.
The process isn't perfect, and true to its mission statement, the IPO shares are allocated randomly to Robinhood users. If it's one of the market's hot IPO stocks, there won't be enough shares to satisfy the hungry mouths of Robinhood's growing user base.
However, just as we're seeing quality companies wind up on IPO Access, it makes sense for investors to consider keeping a Robinhood account active for a shot at the next big offering. Even if Robinhood users don't fall into the "buy and hold" mind set that new issues seek for stability, it's important to establish a shareholder base with forward-thinking young investors. Robinhood gets it -- and so do the nine companies that have now gone this route in the past five months.
