Quick Answer: Retail investors can take part in an IPO in two main ways: by requesting shares at the offering price through a participating brokerage, which is limited and never guaranteed, or by buying on the open market once the stock begins trading. IPOs are generally more volatile than established stocks, and you can lose some or all of your investment. Some investors research the company’s filings, decide in advance how much they are willing to risk, keep any single IPO to a small share of their portfolio, and build a position gradually.

Alinea Invest offers fractional shares from $1 where available, recurring investing, and Allie, an AI assistant that provides educational research and feedback. Allie does not provide investment advice or recommendations.

Key Takeaways

• Most IPO shares go to institutions. According to Reuters, individual investors typically receive only 5% to 10% of shares in public offerings [4].
• Allocation is not guaranteed. Even eligible investors may receive fewer shares than requested, or none. Alinea does not offer IPO allocations at the offering price.
• Most retail investors buy after trading begins, at a market price that can be higher or lower than the offering price.
• Position size matters. Some investors limit any single IPO to a small share of their portfolio. Position sizing does not protect against loss.
• Many newly public companies are not yet profitable. According to Professor Jay Ritter of the University of Florida, 53% of 2025 US IPOs reported negative earnings in the 12 months before listing [5].
• Volatility is common early on. Expect sharp price swings in the first months, and understand lock-up periods before they expire [6].
• Tools can help you plan. Fractional shares and recurring investing let investors choose smaller amounts, and Allie can explain companies in plain language. They do not reduce risk or assure a profit.

What is retail IPO participation: Retail IPO participation is when an individual (non-institutional) investor buys shares in a company’s initial public offering, either at the set IPO price through a participating brokerage or on the open market once the stock begins trading. An initial public offering, or IPO, is the first time a private company sells shares to the public.

Why IPOs Are Back in Focus in 2026

IPO activity has picked up in 2026. According to Renaissance Capital, 35 US IPOs raised $9.9 billion in the first quarter [1], and 48 IPOs raised $104.8 billion in the second quarter [2]. The largest was SpaceX, which raised about $75 billion when it listed on the Nasdaq on June 12, 2026 [2][3].

IPO activity does not indicate the quality of any company or how a stock will perform. The same considerations apply to each IPO, whether it is a well-known company or a smaller one you have never heard of.

How Retail Investors Can Access IPOs

There are two main ways to get IPO shares as a retail investor: at the IPO price before trading begins, or on the open market after the stock lists.

At the IPO price. According to Reuters, individual investors typically receive only 5% to 10% of shares in public offerings, through participating brokerages [4]. To be considered, you typically open and fund an eligible account, review the prospectus, and submit an indication of interest, a non-binding request for shares. You would pay the fixed offering price. Allocation is never guaranteed, and you may receive fewer shares than requested, or none. Alinea does not offer IPO allocations at the offering price.

On the open market. Most retail investors buy after the stock begins trading. This is available through any brokerage that offers US stocks, at the current market price, which can be well above the IPO price, especially for in-demand names, or lower. Once a newly public stock is trading and available on Alinea, you can buy it in a self-directed brokerage account, including with fractional shares from $1 where available. Not all securities are available for fractional trading, and fractional shares may not be transferable to another firm and may not carry voting rights [8]. Alinea does not provide advice or recommendations about individual stocks.

Five Things Investors Often Consider Before Investing in an IPO

A sound approach to IPOs is less about getting in first and more about understanding risk. These five considerations apply to any offering.

1. Understand the business. Read past the headlines to what the company does, how it makes money, who its customers are, and who runs it. The S-1 prospectus is the primary source. Many newly public companies are not yet profitable [5], which raises risk. SEC disclosure does not mean a company is a sound investment.

2. Consider your risk tolerance. IPOs tend to be more volatile than established stocks because they have little or no public trading history. Some investors decide in advance the maximum amount they are comfortable risking and check that an IPO fits within it.

3. Consider position size. Some investors keep any single IPO to a small percentage of their total investments. Diversification across companies, sectors, and asset types can reduce the impact of any one investment falling, but it can’t guarantee against loss [7].

4. Consider building a position over time. The first-day surge is the part most people see, and first-day gains can fade in the following months. Some investors invest a set amount on a schedule, an approach known as dollar cost averaging, rather than all at once. Dollar cost averaging does not assure a profit or protect against loss in declining markets.

5. Know the lock-up period. Company insiders are often restricted from selling for a set window after the IPO, which the SEC says most commonly lasts 180 days [6]. When it expires, additional shares can reach the market and the price may move sharply.

Common Pitfalls

• Putting a large share of your portfolio into one IPO. This increases the risk that one company’s results lead to a large loss.
• Buying on day one because the price is jumping. First-day prices can be volatile, and demand can inflate the price.
• Relying on social media instead of the filing. The S-1 is the primary source on how the company earns revenue and what its risks are.
• Assuming an IPO is a guaranteed quick profit. IPOs can lose value, and you can lose some or all of your investment.

Investing in Newly Public Companies on Alinea

Alinea Invest, Inc. offers a mobile investing app. Investment advisory services are provided by Alinea Advisory Services LLC, an SEC-registered investment adviser and a wholly owned subsidiary of Alinea Invest, Inc. SEC registration does not imply a certain level of skill or training. Once a company is publicly traded and available on Alinea, you can buy it in a self-directed brokerage account the same way as other listed US stocks. Alinea does not provide advice or recommendations about individual stocks.

• Fractional shares from $1. Fractional shares let you invest a smaller dollar amount in a stock instead of buying a full share. Not all securities are available for fractional trading, and fractional shares may not carry voting rights [8].
• Allie. Allie, Alinea’s AI assistant, can provide plain-language educational research and feedback on companies, portfolios, and market news. At your request, Allie can also start a buy or sell, and you confirm every transaction before it runs. Allie does not provide investment advice or recommendations, and its responses may be inaccurate or incomplete.
• Recurring investing. You can set a fixed amount to invest on a schedule, an approach known as dollar cost averaging. Dollar cost averaging does not assure a profit or protect against loss in declining markets.

Brokerage accounts are held at DriveWealth LLC, member FINRA/SIPC, which is not affiliated with Alinea. SIPC protects securities customers of its members up to $500,000 (including $250,000 for claims for cash) if the brokerage firm fails financially. It does not protect against a decline in the market value of your securities [9].

Illustrative example: Consider a first-time investor who is excited about a major technology IPO and wants to put a large share of their savings into it. Another approach some investors take is to allocate only a small percentage of an already diversified portfolio and add to the position gradually. If the stock’s price swings sharply in its first months, as new listings often do, the position can still lose value, and diversification and dollar cost averaging do not assure a profit or protect against loss. This example is illustrative only, is not a recommendation, does not reflect actual client results, and is not a prediction of future results.

Key Terms Glossary

• IPO (initial public offering). The first sale of a private company’s shares to the public.
• S-1. The registration document a company files with the SEC before a US IPO, containing its financials and risk factors.
• Indication of interest (IOI). A non-binding request to buy IPO shares at the offering price through a participating brokerage.
• Allocation. The number of IPO shares a brokerage actually grants you, which can be fewer than requested.
• Underwriter. The investment bank that manages the IPO and distributes shares.
• Lock-up period. A set window after the IPO, most commonly 180 days according to the SEC, during which insiders cannot sell their shares.
• First-day pop. A sharp rise in a stock’s price on its first day of trading.
• Direct listing. A way to go public without issuing new shares through underwriters.
• Fractional share. A portion of a single share, allowing investment of small dollar amounts. Fractional shares may not be transferable to another firm and may not carry voting rights.
• Dollar cost averaging. Investing a fixed amount on a regular schedule regardless of price. It does not assure a profit or protect against loss in declining markets.
• Secondary market. The open market where shares trade after the IPO.

Frequently Asked Questions

Is there a best strategy for retail IPO participation?

There is no single best approach, and no strategy assures a profit or protects against loss. Some investors treat each IPO as a small, researched position, understand the business, decide how much risk they are willing to take, and build a position gradually rather than buying in the first-day surge.

How much of my portfolio should I invest in a single IPO?

There is no set rule. The right amount depends on your goals, time horizon, and risk tolerance. Alinea does not provide personalized recommendations on how much to invest in any single security, and any single stock can lose all of its value.

Can retail investors buy IPO shares at the IPO price?

Sometimes. According to Reuters, individual investors typically receive only 5% to 10% of shares in public offerings, through participating brokerages [4]. Investors submit a non-binding indication of interest, and allocation is not guaranteed, so most retail investors buy after the stock begins trading. Alinea does not offer IPO allocations at the offering price.

Can I invest in a newly public company with Alinea?

Once a company is listed and available on Alinea, you can buy it in a self-directed brokerage account like other US listed stocks, starting with fractional shares from $1 where available. Availability varies by security, so confirm that a company is actually listed and available before trying to buy it.

Are IPOs a good investment for beginners?

Whether an IPO is suitable depends on your goals, time horizon, risk tolerance, and the specific company. IPOs generally carry higher risk than established stocks because they have little or no trading history, and you can lose some or all of your investment.

Should I buy an IPO stock on its first day of trading?

There is no right answer for every investor. The first day is often the most volatile, and demand can inflate the price. Some investors prefer to research the company and wait. Neither approach assures a profit or protects against loss.

What is a lock-up period and why does it matter?

A lock-up period is a window after the IPO, which the SEC says most commonly lasts 180 days, during which insiders cannot sell [6]. When it ends, more shares can reach the market, which can affect the price.

What does Alinea Invest offer investors interested in IPOs?

Alinea lets you invest in publicly traded stocks and ETFs in self-directed brokerage accounts, with fractional shares from $1 where available. It also offers recurring investing and Allie, an AI assistant that provides educational research and feedback. Alinea does not offer IPO allocations at the offering price. Alinea’s support team handles questions about using the service only and does not provide investment advice.

Disclosure

Advisory services are provided by Alinea Advisory Services LLC, an SEC-registered investment adviser and a wholly owned subsidiary of Alinea Invest, Inc. SEC registration does not imply a certain level of skill or training. Brokerage and custody services are provided by DriveWealth LLC, an unaffiliated registered broker-dealer and member of FINRA/SIPC.

This content is for informational purposes only and is not an offer, solicitation, or recommendation to buy or sell any security, including any security mentioned. All investing involves risk, including loss of principal. Past performance does not guarantee future results. Individual stocks are traded in self-directed brokerage accounts, and Alinea does not provide advice or recommendations about them. Allie is educational only, does not provide investment advice, and can make mistakes. Third-party statistics are from the sources and as of the dates listed under Sources, have not been independently verified by Alinea, and different providers use different definitions and may report different totals. Alinea is not affiliated with these sources, and their inclusion is not an endorsement. Alinea charges a subscription fee for its advisory services; see Item 5 of Form ADV Part 2A.

See our Form ADV Part 2A, Wrap Program Brochure, and Form CRS at www.alinea-invest.com/legal.

Sources

[1] Renaissance Capital, US IPO Market 1Q 2026 Quarterly Review, April 1, 2026 (renaissancecapital.com). Renaissance counts IPOs and direct listings with a market cap of at least $50 million and excludes closed-end funds, units, and SPACs.

[2] Renaissance Capital, US IPO Market 2Q 2026 Quarterly Review (updated), July 1, 2026 (renaissancecapital.com). Other data providers report different totals.

[3] SpaceX, Form 424B4 prospectus, filed June 12, 2026 (sec.gov/edgar).

[4] Reuters, “OpenAI will reserve portion of IPO shares for retail investors, CFO tells CNBC,” April 8, 2026.

[5] Jay R. Ritter, University of Florida, Initial Public Offerings: Updated Statistics, Table 9 (updated December 30, 2025). Share of 2025 US operating company IPOs with negative earnings per share over the prior 12 months.

[6] U.S. Securities and Exchange Commission, Investor.gov, “Initial Public Offerings: Lockup Agreements.”

[7] U.S. Securities and Exchange Commission, Investor.gov, “Diversify Your Investments.”

[8] FINRA, “Investing in Fractional Shares,” finra.org.

[9] Securities Investor Protection Corporation (SIPC), What SIPC Protects (sipc.org).

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