Fintech firm SoFi to allow users to buy directly into IPOs

• SoFi announced on Friday that it will allow its users to directly invest in IPOs.
• The announcement comes a day after popular trading app Robinhood said it is looking to allow its users to also buy into IPOs, including its own.
• SoFi said its IPO product offering will be available to users who have at least $3,000 in total account value across all of SoFi Invest.
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Financial technology firm SoFi announced on Friday that it will be allowing its users to directly invest into initial public offerings, an opportunity usually reserved for institutional investors.

Retail traders at present are not able to buy stocks of newly listed companies until they start trading, unlike Wall Street investors or high net-worth individuals. SoFi's new initiative will be considered a win for retail traders as shares often trade higher when they debut in what is commonly known as a first-day pop.

The announcement of SoFi comes a day after Robinhood said it is looking to allow its users to also buy directly into IPOs, including its own upcoming public debut.

"IPO Investing reflects our continued effort to make investing more accessible, by pioneering fractional shares, offering commission-free trading, creating unique SoFi-branded ETFs, and now, IPO investing," Anthony Noto, CEO of SoFi, said in a statement.

The company said its IPO product offering will be available to users who have at least $3,000 in total account value across all of SoFi Invest. Noto told CNBC that less than 1% of SoFi accounts are "active," referring to traders that trade more than three times per day.

SoFi, which is currently only available to residents in the US, started out as a company focusing on student loan refinancing and personal loans in 2011. Since then, the company has expanded into other areas of personal finance, including insurance, checking and savings accounts, and investment options.

The fintech company in January announced it is going public is via a merger with Social Capital Hedosophia Holdings, a SPAC backed by billionaire investor Chamath Palihapitiya. The merger will value SoFi at nearly $9 billion.