At the end of July, the media’s favorite brokerage IPO’d. Which brokerage is that, you might ask? Why, Robinhood, of course—the brokerage that has been sued more times than we care to count. But we did count. There have been 49 class-action lawsuits against Robinhood in 2021 alone—and the year isn’t even over yet!
So, Robinhood IPO’d. What does that mean? IPO stands for initial public offering. Before a company IPO’s, or “goes public,” it’s privately held by a specific group of investors. To become one of those investors is difficult—some would even say next to impossible.
But once a company IPO’s, it’s publicly traded on the stock market. This means anyone in the general public can open a brokerage account and buy shares in that company. Publicly traded companies like Apple, Google, and Netflix already have shares available for purchase on the stock market. Now, the same goes for Robinhood.
What does Robinhood going public mean for people who use this brokerage? As of right now, not much—except for the fact that you could now own shares in Robinhood while using Robinhood.
So what should the public do now that Robinhood is publicly traded—go out and buy their stock? At Nelson Financial Planning, we strongly caution against doing so. Robinhood’s first day on the market only supports our view that owning individual stocks just comes with too much risk.
Robinhood dropped almost 9% on its first day on the market! This is why our financial planners recommend owning funds that have a long, proven track record, not individual stocks that can fluctuate wildly in value.
If you want a certified financial fiduciary to take a look at your portfolio, or you need help setting up an investment account, feel free to contact Nelson Financial Planning at 407-629-6477. We’re always here to help.