It’s getting easier for regular people to invest in what was once one of Wall Street’s most exclusive domains: an initial public offering.

Trading startups Robinhood Markets and Social Finance are looking to offer clients the chance to buy IPO shares early, instead of after they hit the market. Companies planning to go public—like London-based delivery app Deliveroo, which debuted Wednesday—are giving customers access to pre-IPO stock. And fast-growing blank-check firms known as SPACs are a back-door way for some individual investors to get in on an IPO.

All that is wresting some power out of the hands of big Wall Street banks, which for years have doled out shares to their favorite clients, in some cases simply as a courtesy for doing business.

In other parts of the world, particularly in Asia, so-called mom-and-pop investors have more access to the IPO market. In some countries, companies are even required to allocate a significant chunk of their offer-price shares to such retail traders.

But in the U.S. and the U.K., with a few exceptions, participation in large IPOs has long been restricted to hedge funds, professional asset managers and the wealthy. Retail investors were excluded from 93% of major London listings between October 2017 and October 2020, according to research from Hargreaves Lansdown Plc.

IPO shares can be attractive because of first-day price “pops” that get a lot of attention. Over the past few months, shares in several well-known companies have  soared on the first day of trading. Between 1980 and 2020, the average first-day increase was 18.4%, according to Jay Ritter, a University of Florida professor who studies IPOs.

But people who bought early shares in Deliveroo’s float on Wednesday learned how risky an IPO can be when the stock tumbled 26% by the close on the first day of trading. It fell further on Thursday, and was down about 2% as of 1:39 p.m. in London. Long term, the investments might not be smart: Excluding first-day performance, IPO shares underperformed the market by 15.8% after three years, according to Ritter’s data.

When Airbnb Inc. shares opened up 115% in December, it wasn’t just investment banks and their clients that made a killing. The company had invited hosts like Kelly Lyons, of New York City, to buy a limited amount of shares at the IPO price of $68.

Lyons purchased close to $14,000—the maximum she was allowed—of pre-trading shares of the Nasdaq listing. She is an active trader who previously worked as an investment banker, and she believes in the company.

“I feel like I have an ‘in’ in understanding how Airbnb improves the lives of hosts and how passionate people are about it,” she said.

Her portfolio year-to-date is up around 40%, which she attributes primarily to her Airbnb holdings, she said. She says she’s even more loyal now to the brand.

Some see these offerings as marketing gimmicks, or at best a perk that also could strengthen loyalty to the brand. Customers-turned-investors say that, indeed, they feel more connected to the companies.

“It’s like you’re part of the team and you can cheer them on,” said Dan Scagnelli, a 36-year-old from London who bought 500 pounds ($690) worth of shares in Deliveroo before it went public. Scagnelli says he is excited about Deliveroo’s future and beeps his horn when he sees delivery riders out on their bicycles around town.

Before Deliveroo’s trading debut, he told Bloomberg in an interview that he planned to hold onto the shares for months.

“Normally my holding period is seven months to longer,” he said. “I classify myself to a medium-longer term investor.”

After the shares fell, he was sanguine.

“It’s okay, I have strong diamond hands, and this isn’t the time for paper hands,” he said, using slang for people who hold onto shares, despite dips. “It’s only paper losses today—although it’s not good PR, and I feel for the customers whose first investment it may have been.”

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