How to Buy IPO Shares as a Retail Investor
Most ordinary investors can buy an IPO stock only once it starts trading, at whatever price the market sets, which can be far from the IPO price. Getting shares at the offer price is rare: underwriters give most of them to institutions, though some brokers offer small allocations to eligible customers.
This post lays out each route, how a broker's IPO access works, and what each one costs you in price or certainty.
What are the ways to buy IPO shares?
| Route | Price you pay | The catch |
|---|---|---|
| Broker IPO access | The offer price | Small, not assured, and open only to eligible customers; you may get fewer shares than you ask for, or none. |
| Buy when it starts trading | The market price | The opening price can be far above the offer price; Airbnb opened 114% higher in 2020. |
| Wait for more history | The market price later | You see a lock-up expiry and a few quarterly reports first, but the early move has already happened. |
| Funds that hold recent IPOs | The fund's price | A diversified slice, not the one company, and funds hold other things too. |
| Private secondary routes | A negotiated price | Before the IPO only; limited to accredited investors, with transfer limits and fees. |
How does a broker's IPO access work?
If your broker offers it, you place an indication of interest before the IPO prices: how many shares you would take and the highest price you would pay. It is a request, not a purchase.
- You apply. The offer is open for a short window before pricing, and the broker may set eligibility rules.
- The IPO prices. If the final price is above your limit, your request lapses.
- You are allocated or not. Demand usually exceeds supply, so a request can be filled in part or not at all.
- The stock trades. Any shares you received are yours at the offer price, whatever the opening trade is.
Rules and fees vary by broker, so read your broker's terms. The company's filing, not the broker's page, is the source for the deal's size and use of proceeds.
What does the first day of trading look like?
| Company | Offer price | What happened next |
|---|---|---|
| Airbnb (December 2020) | $68 | Opened at $146 and closed at $144.71, per CNBC |
| Facebook (May 2012) | $38 | Fell below $38 on its second trading day, to $33.76, per TechCrunch |
Someone who bought Airbnb at the open paid more than double the offer price; someone who got Facebook at $38 was behind within two days. Neither outcome tells you about the next IPO. For how the price is set, read how IPOs work.
What are the risks of buying a new IPO?
- Price risk. The first trade is set by demand on the day and can sit well above or below the offer price.
- Thin history. The company has little track record as a listed business, so there are fewer filings and estimates to check the price against.
- Lock-up expiry. When insiders can sell, often 90 to 180 days after listing, more shares can reach the market.
- Dilution and fees. New shares and stock-based pay add to the share count; see the stock-based compensation entry.
The one free source that exists before the first trade is the company's registration statement. How to read an S-1 shows which parts to read first.
Can you buy shares in a private company before it lists?
Only through private routes, which are generally limited to accredited investors and come with transfer limits, fees and long holding periods. The best-known private names, such as Stripe and OpenAI, have no ticker and no public filing to read. See the IPO guide for where each stands.
Buying IPO shares FAQ
Can I buy IPO shares at the offer price?
Sometimes. Some brokers offer eligible customers a small allocation at the offer price, but the allocation is not assured and may be smaller than you ask for or nothing. Otherwise you buy once the stock trades.
What is an indication of interest?
A non-binding request, made through a broker before the IPO prices, saying how many shares you would take and at what highest price. If the IPO prices within your limit and shares are allocated to you, you are bought in.
Is it risky to buy a stock on its first day of trading?
First-day prices can swing widely, and the opening price can sit far above or below the IPO price. The company also has little trading history as a listed company, so the price rests on less information.
Can I buy a private company before its IPO?
Only through private routes such as secondary marketplaces or special-purpose vehicles, which are generally limited to accredited investors and come with transfer limits, fees and long holding periods.
Educational content only, not investment advice; this site does not arrange any purchase.