How do Robinhood's limit orders work for pre-IPO shares?

External question — Personal Finance Stack Exchange Author: Franck Dernoncourt Original post: https://money.stackexchange.com/questions/169709 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I am confused by access to IPOs via Robinhood. On one side, https://robinhood.com/us/en/support/articles/preipo-trading/ states: We offer pre-IPO orders for a small selection of stocks, and won’t support pre-IPO orders for every company that lists on the market. These orders are limit orders only, which means we can’t guarantee your order will get filled. which sounds like it is just a regular limit order on the secondary market as some users in How is the max share price used by the broker when a customer indicates interest for an IPO? mentioned. But at the same time, those limit orders must be passed much before the market open according to the Robinhood application: SpaceX: $135.00. IPO Access listing. Price has been finalized. Edit or cancel your request by June 11, 2026 at 8:59 PM PDT. Furthermore, flipping is discouraged : You can sell the shares you received through IPO access at any point in time. However, if you sell IPO shares within 30 days of the IPO, it's considered flipping and you may be prevented from participating in IPO access for 60 days. This policy applies to all IPOs offered with IPO access. and from https://robinhood.com/us/en/support/articles/how-to-sign-up-for-ipo-access/ : IPO Access gives you the opportunity to buy shares at the IPO price right before the stock starts trading on the secondary market. and now that SPCX IPO price has been finalized, when editing the order request on Robinhood, one cannot change the limit price: although I can still see the max share price in the original order: so it doesn't sound like a regular limit order on the secondary market. Therefore, I am confused. How do Robinhood's limit orders work for pre-IPO shares? Is that considered subscribing to an Initial Public Offering (IPO), i.e. applying to purchase a company's shares before they begin trading on the public market?

External answer — Personal Finance Stack Exchange Author: Ellie K Original post: https://money.stackexchange.com/a/169710 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Participating in an IPO is similar at all retail brokerages. Robinhood's "conditional order to buy" (COB) How to request IPO shares resembles the "IPO participation" process at Fidelity. Customers must satisfy eligibility criteria , then indicate interest in participating/COB including number of shares. The night before the stock begins trading publicly, the underwriter finalizes the IPO share price and prospectus, then registers the stock with the SEC. Investors have two options : Confirm interest in the IPO. You'll be told the final IPO share price but won't know if you've been allocated shares. OR Tell the brokerage that you do NOT confirm . This revokes your participation in the IPO/COB. Robinhood's Pre-IPO Ordering is a different service: "You can place orders for certain stocks before their IPO... These orders are limit orders only...." How pre-IPO orders work , emphasis mine: We typically allow our customers to place limit orders to purchase shares of IPOs on their opening day around 8 AM ET. If you place an order, we’ll send it to our execution venue the morning of the IPO. So they accept orders before the IPO but they don't fill them at the IPO share price nor execute them in the primary market. This is the important part : Keep in mind these aren’t pre-IPO stocks... you’re not participating in the IPO . We're simply providing you the convenience of entering your orders before the morning of the IPO. We can’t execute your order until the stock... begins officially trading publicly... Robinhood's "pre-IPO order" option is something of a marketing gimmick, and the name is counterintuitive. Pre-IPO orders aren't executed on pre-IPO stock, nor even on IPO shares! It is misleading, but at least one non-app brokerage does similarly. Vanguard doesn't allow their retail brokerage customers access to IPO shares (nor IPO allocation platforms). Vanguard cautions IPO participation for individuals in general, but does suggest this, How to Buy IPO Stock, see part 4 : Place a limit order before trading begins, if available. A limit order can help set the maximum price you're willing to pay before the stock opens on the secondary market. That's a lot like Robinhood's Pre-IPO orders!

External answer — Personal Finance Stack Exchange Author: jcaron Original post: https://money.stackexchange.com/a/169711 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. It looks like there are actually two different processes: Participation in the IPO (what it looks like they call "IPO Access"), which will be executed at the IPO price, and have limited allocation "Pre-IPO orders" which as described in Ellie K's answer are just regular buy orders that you place before the IPO, but will be executed AFTER the IPO, once the stock is trading, at the current market price (below the limit given) without allocation restrictions. Your question mixes the two. The "no-flipping" rule, the time limit rule, etc. apply to the IPO, not the pre-IPO orders.