With Stripe’s much-anticipated IPO on the horizon, many investors are eager to get a piece of this high-growth payments company. As one of the most valuable private companies in the world, Stripe’s market debut promises to be a blockbuster event. However, snagging shares of Stripe at IPO requires strategy and planning. Here are some tips for investors looking to invest in Stripe’s upcoming IPO gathered from discussions on Reddit and other online forums.
Understand Stripe’s business model and growth prospects
As an online payments infrastructure provider, Stripe has benefited enormously from the e-commerce boom amid the pandemic. Its software allows merchants to easily accept digital payments on websites and mobile apps. Stripe charges a small transaction fee each time it processes a payment. With more commerce shifting online, Stripe’s total payment volume and revenue have surged. Analyzing Stripe’s financials and growth drivers will help investors determine if the expected IPO valuation is justified. Stripe is still private, but some key metrics are reported periodically.
Decide how much you want to invest in Stripe’s IPO
Most retail investors only get small IPO allocations from their brokers. For a red-hot IPO like Stripe, you may get shares worth just a few hundred or thousand dollars. Consider how much you want to invest in Stripe relative to the rest of your portfolio. Some Reddit posters plan to put 2-5% of their portfolio into Stripe stock post-IPO. You’ll also want cash ready to invest since IPO stock is typically settled in a couple days.
Pick a brokerage that gives IPO access to retail investors
Unlike institutional investors, everyday investors generally can’t invest directly in an IPO. You’ll need an account with a brokerage firm that participates in IPO distributions to retail clients. Popular Reddit brokerage choices for IPO access include Fidelity, E*Trade, TD Ameritrade, Charles Schwab, and Webull. Check each broker’s requirements for IPO investing, as you may need a minimum account balance.
Express your interest in Stripe’s IPO to your broker
Most brokers will ask if you want to participate in upcoming IPOs. Tell your broker you want to invest in Stripe’s IPO so they can try to get an allocation for you. Some brokers have an IPO calendar or notification service. You may need to periodically call your broker to reconfirm your interest. The more notice brokers have of client demand, the more IPO shares they will request from underwriters.
Be ready to act fast once Stripe’s IPO launches
Timing with hot IPOs is critical, as shares may start trading within a day or two after the offering prices. Have a game plan for investing your desired IPO allocation amount. Monitor your brokerage account closely for the pending Stripe share deposit. Consider entering a limit order to purchase more shares once trading begins. Set price targets in case you want to take profits on the first-day pop common among high-profile IPOs.
Stripe’s upcoming IPO is one of the most eagerly awaited public listings in years. Investors looking to buy shares at IPO should analyze Stripe’s business, pick a brokerage that provides retail IPO access, express IPO interest to their broker, and be ready to act quickly when the offering commences.