How to Invest in IPOs as a Regular Investor

Learning how to invest in IPOs starts with one fact: there are only two routes. You either get an allocation of shares at the offering price through a broker that takes part in the initial public offering (IPO), or you buy the shares on the stock exchange after trading begins, like any other listed stock.

The first route is harder than it sounds, because most IPO shares go to large clients. The second route is open to anyone with a brokerage account, but early prices can swing hard. This guide explains both, the rules brokers apply, and what to read before you put money in. It's education, not personal advice.

What does it mean to invest in an IPO?

An IPO is the first time a company offers its shares to the general public. Before that, the company is private and its shares are held by founders, employees and early investors.

To go public in the US, a company files a registration statement with the SEC, usually on Form S-1. Its core is the prospectus, the document that describes the business, its finances, its risks and the terms of the offering. Investment banks called underwriters collect "indications of interest" from prospective investors and recommend a price. The company then lists on an exchange such as the NYSE or Nasdaq.

Investor.gov is clear on two points. The SEC's review of the filing is not a stamp of approval: it doesn't judge whether the IPO is a good investment. And by their nature, IPOs can be risky and speculative. If the mechanics of shares and exchanges are new to you, start with how the stock market works, then come back here.

Can regular investors get IPO shares at the offering price?

Sometimes, but the odds are against you, especially for popular IPOs. Investor.gov notes that underwriters often distribute most IPO shares to institutional and high-net-worth clients, such as mutual funds, pension funds and wealthy individuals.

More online brokers now take part in IPOs, but each one usually receives a small allotment. Investor.gov warns that no brokerage firm can promise you shares, and your chances of getting a "hot" IPO may be limited whichever firm you use. Brokers must also consider whether the IPO is suitable for you based on your income, net worth, objectives and risk tolerance.

Each firm sets its own rules. Two examples, as of 2026:

• Fidelity reserves participation for customers with either $100,000 or $500,000 in certain assets at the firm, depending on the IPO, or members of its Premium Services. You also need $2,000 in a brokerage account to submit an indication of interest. Shares are allocated by ranking customers on the assets and revenue in their accounts.
• Robinhood's IPO Access uses random allocation, so each eligible request has the same chance of receiving all, some or none of the shares requested. It doesn't add a fee to the IPO price, but retirement, joint, custodial and managed accounts aren't eligible.

Some people can't buy IPO shares at all. FINRA Rule 5130 bars brokers from selling new issues to "restricted persons", which covers people in the securities industry and, with limited exceptions, their immediate families.

Before chasing any single company, make sure the basics are in place. Our beginner's guide to investing covers the emergency fund, accounts and diversified core that should come first.

How to invest in IPOs, step by step

Whichever route you take, the process follows the same order: check access, read, then decide on a price you'll accept.

1. Check your broker's IPO program. See whether it offers IPOs, which accounts qualify and what eligibility rules apply. Our guide on how to choose a broker covers the wider checklist.
2. Find the filing. Search the company on the SEC's EDGAR database. The S-1 and its amendments (S-1/A) are public. Always read the most recent version, because the prospectus changes during the process.
3. Read the key sections (see the table below) before you request shares.
4. Submit an indication of interest or conditional offer. You state how many shares you'd like within the expected price range. It isn't a purchase yet.
5. Confirm or cancel. Once the price is set, your broker asks you to confirm. If the final price is higher than you're comfortable with, you can usually walk away at this stage.
6. Accept whatever is allocated. You may get your full request, part of it or nothing.

If you don't get shares, or skip the allocation route, you can buy once trading starts. A limit order sets the most you'll pay, which protects you if the opening price jumps well above where you expected.

What should you read in an IPO prospectus?

The prospectus is often the only detailed information available on a newly public company. Investor.gov highlights these sections:

Investor.gov also points out that "emerging growth companies" can phase in some public-company disclosure requirements, such as auditor reviews of internal controls and full executive pay disclosure. Factor that in when you compare their numbers with older public companies.

Why do IPO prices swing so much after listing?

Because the offering price is a negotiated estimate, and very few shares trade at first. Investor.gov says the closing price shortly after an IPO is often well above or below the offering price.

Several forces are at work:

• Underpricing. Underwriters have an interest in a price that their clients find attractive, which can lead to a first-day "bump".
• Price support. Underwriters can support the trading price in the first days, for example by buying shares. Once that support ends, the SEC warns the price may decline significantly below the offering price.
• Limited supply. On day one, usually only the shares sold in the IPO can trade. Strong demand chasing few shares can push the price up steeply.
• Lock-ups and overhang. Founders, employees and early investors usually sign a lock-up agreement not to sell for a period, which Investor.gov says is typically 180 days. When it expires, a wave of shares can become available and the price may fall.

None of these patterns is certain for any particular IPO. They're reasons to expect volatility, not a timing strategy.

What happens if you sell IPO shares quickly?

Your broker may stop offering you IPOs. Selling shortly after an IPO is called flipping. It isn't illegal, but underwriters and brokers discourage it.

At Fidelity, for example, selling shares within 15 calendar days of trading starting leads to a 180-day ban from IPOs for a first violation, 365 days for a second and a permanent ban for a third, as of 2026. Investor.gov notes that other firms may refuse future IPOs or block you for several months, and they usually publish these rules on their websites.

If you hold IPO shares in a taxable account, a quick sale also means any gain is short-term, which is usually taxed at a higher rate than long-term gains in the US. Rules differ in the UK, Canada and Australia, so check your country's tax guidance.

Is investing in IPOs a good idea for beginners?

For most beginners, IPOs are a small optional extra at most, not a foundation. The reasons are the ones above: limited access at the offering price, thin public history, big early price swings and insiders who may sell later.

Keep these points in mind:

• Concentration. One new company can fall a long way. Investing involves risk, including loss of principal, and returns aren't promised.
• Hype. By the time an IPO is everywhere on social media, the excitement is usually in the price. Our list of beginner investing mistakes covers chasing trends.
• You may own it anyway. If a company grows large enough, broad index funds generally add it in line with their rules, so a diversified fund can give you a share in successful listings without picking them. See index funds for beginners.
• Account type. Some programs exclude retirement accounts such as IRAs. Outside the US, ISAs in the UK, TFSAs in Canada and Australian brokerage accounts each have their own rules on what they can hold.

Interested in companies that haven't listed yet? Pre-IPO shares are a different and riskier world, covered in our guide on how to invest in private companies.

Next steps

• Build the foundation first with our step-by-step guide to start investing.
• Compare platforms and IPO access in how to choose a broker.
• Want to grow the amount you invest? Explore realistic income ideas in our guide to making money online.