Seeing Others Make Money Is More Painful Than Losing Yourself
For those who missed out on Figma and didn’t get on the bandwagon, there’s no need to be disheartened. A Benzinga contributor subscribed for 1,000 shares through Robinhood before the Figma IPO, believing he was one step closer to an early retirement, only to find it was all in vain.
On July 31, design collaboration platform Figma Inc. (NYSE: FIG) officially listed on the New York Stock Exchange, quickly becoming the center of attention in the tech world. This company not only delights designers but is also cherished by cloud giants like Google and Airbnb. In 2022, Adobe was willing to spend $20 billion to acquire this UI/UX design startup, but was met with regulatory rejection. Since then, Figma’s valuation has become formidable, and from Wall Street to Silicon Valley, everyone regarded Figma’s IPO as a major event of the year.
The debut of FIG was also impressive: it opened at $85, more than doubling its initial price of $33, soaring to a point that made investors question reality, with its market value briefly surpassing $55 billion. By the close on Friday (August 15), FIG settled at $79, leaving investors smiling. However, that contributor only had one share to admire; what exactly happened?
Robinhood Enables Retail Investors to Participate in IPOs
In the past, it was nearly impossible for retail investors to participate in IPOs, as Wall Street’s major banks had firmly controlled the market, often snatching up stocks before most people could even blink. However, in 2021, Robinhood launched the IPO Access Program, changing the game and giving ordinary retail investors a chance to purchase shares before they went public. Benzinga’s author Tom Gentile saw Figma appear on the IPO page and immediately clicked the subscribe button, his speed rivaling that of snagging BlackPink concert tickets. He quickly submitted a request to purchase 1,000 shares at a maximum price of $33 per share, having $33,000 ready to invest.
The emotions on IPO day were akin to a roller coaster.
Tom Gentile received an email from Robinhood confirming his commitment to invest $33,000 in Figma, stating that he would only be charged once he received a stock allocation. On the day of the IPO, FIG opened at $85 and then soared, doubling in price. Tom Gentile was already reveling in the thought that his profit from buying 1,000 shares would exceed $80,000! At that moment, he had not yet seen the second email from Robinhood. When he finally opened it, he was met with a heartbreaking message: “Your request to purchase 1,000 shares of FIG has been partially fulfilled. Congratulations, you have received one share of FIG stock at a transaction price of $33.”
Robinhood was like playing a blind box for retail investors, buying stocks akin to opening a trading card pack.
This is not a typo, nor a copy error, nor a test email; Tom Gentile truly received only one share. Prepared to invest $33,000, he was instead mockingly greeted by the harsh reality of fate, as this IPO felt like a grand lottery where he only received a consolation prize.
The Harsh Truth: Having a Ticket Doesn’t Guarantee Entry
Robinhood employs a Random Allocation Process that allows retail investors a fair chance to participate, but it’s akin to playing a gacha game; putting in money doesn’t guarantee receiving the most valuable rare character. Many investors on Reddit lamented that they received nothing, and don’t assume you can immediately cash out and sell this one share. Robinhood has a jump ship clause; if you sell your IPO allocation within 30 days, you will be frozen for 60 days and prohibited from participating in future IPOs.
Risk Warning
Investing in cryptocurrencies carries a high level of risk, and their prices can be highly volatile. You may lose all your principal. Please assess the risks carefully.