IPO Access at Webull
If you are looking for potentially good deals on hot new stocks, IPOs offer some interesting earning possibilities.
Webull seeks to bring a range of pro-level features to every trader in the retail space, and its IPO offerings are a perfect example of that.
Until recently, it was not an easy task to get involved in an up-and-coming listing until the company went live on the stock market. Investors would have to wait to buy in until the price discovery phase was finalized and the stock was fully released.
Now, traders at Webull can get their hands on stocks offered for game-changing companies before the price volatility sets in on opening day. Keep reading to see how you can benefit from Webull’s IPO offerings.
How IPOs Work
Before getting too far into why you might consider Webull for IPO exposure, it is a good idea to know how IPOs work. IPOs, Initial Public Offerings, offer the chance to get into a stock at “the ground floor.” IPOs are the first stocks from a company that are offered to the public. They have completed the registration process, but still have to go through a period of price discovery and have yet to be listed on the secondary market – i.e. the public stock market that most stocks are traded on.
The IPO process allows companies to gather interested investors and sell shares before the public offering commences. This helps the company raise money from the sale of stock, while at the same time decide how much each share will cost when the shares are finally released.
Investors looking to purchase IPOs do not receive their stock right away. Instead, they decide on a share price that they are happy with as well as the number of shares they would like to buy. When the stock goes public, a select number of early investors are chosen to be the first recipients of the company’s stock.
Benefits of IPOs
As mentioned, there are many benefits to investing in IPOs. One of the most attractive things is that the price reflects the value of the company quite closely. All IPOs must make their prospectus publicly visible, and investors may consider the company, what it does, and what its plans are, when weighing the validity of the offered IPO stock prices.
This kind of price transparency is useful for investors looking at both short term IPO flipping strategies, as well as longer term holds.
Another benefit is that many IPOs expand in price quite widely following the final listing on the stock market. There are factors such as hype, brand popularity, and fundamental interest that help push prices far further and faster than what would normally be expected from a new stock listing.
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How to Buy an IPO on Webull
The process of buying an IPO at Webull is a bit different from buying listed stocks, and it is important to know what to expect.
To get started, you will need the mobile app. There are three separate trading platforms to use
with Webull, but the mobile app was first and still has a few more options available than the desktop and web-based version.
On the app, users should navigate to the ‘IPO Center’, via the ‘Markets’ tab. Once there, all of the available IPOs will be listed under the ‘Available’ tab. The number of available IPOs changes daily. Checking daily ensures that none of the best IPOs don’t slip past your radar.
To place a bid on an IPO, also known as initiating an IOI (Indication of Interest), select the ‘Available’ tab to open the list of available IPOs. Once open, an ‘Order Now’ button is located next to any IPOs that are currently accepting IOI’s (bids).
The price estimate for each share when listed will be quoted as either a single price or a range. When the price is presented as a range, traders can select the price they would be happy paying for a stock when it is released (listed).
To place the bid, simply enter the desired price into the available field and press the ‘Enter’ button.
When placing an order for an IPO, all funds used for that order will be placed on hold until the date of release. Once the shares go live, IPO participants are granted a select number of shares at predefined prices or better. It is good to remember that not all IPO participants will receive their order.
If the order goes unfilled, or if the order is only partially filled, the remaining capital will be unlocked and returned to the trader’s account.
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IPO Trading on Webull
Trading IPOs on opening day, or anytime close to that, can be a volatile experience. Many IPOs go through large price swings which attract traders of all kinds. There are many trading systems and strategies built around the IPOs and the behavior surrounding them.
There are a couple of useful things to know if you are interested in getting involved with IPO trading.
Whether you placed a bid on the IPO and are waiting for the stock to become tradable on the open stock market or you are just wanting to get in on the stock during its first live trading day, be aware of the period known as the Price Discovery Phase.
The Price Discovery Phase is a period of a few hours when the new stock can only accept limit orders. As no market orders can be applied during this time, making sure that you know how to place limit orders and stop losses is an important step in successful IPO trading.
IPO Flipping on Webull
Another useful thing to know is the concept of ‘Flipping’. IPO Flipping is the act of selling an IPO within a set period time after the stock has gone live. The period is known as a lock-up period, and companies enact the period to encourage more investors to hold the stock. People still flip IPOs, however, and Webull will allow investors to do it to a limited degree.
Pros and Cons of IPO Trading at Webull
There are a few pros and cons to trading IPOs at Webull, but the pros outweigh the cons by a considerable degree.
Pros
- Easy access to a daily list of available IPOs
- Large list of IPOs (more than the competition)
- Easy-to-access prospectus on each company involved in the IPO program
- Mobile-friendly IPO trading is very convenient
- Fantastic charting available to track an IPO’s progress once it is released
Cons
- Can only bid on IPOs from the mobile app
- IPO information on the desktop doesn’t clearly state that IPOs are only available on mobile.
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Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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