Robinhood Joins the IPO Underwriting Table Alongside Wall Street Giants

Robinhood appears on the tombstone for fitness ring maker Oura's IPO as the 18th of 18 underwriters — an unfamiliar name sitting alongside Goldman Sachs, Morgan Stanley and J.P. Morgan. That placement, notes Fortune finance editor Jeff John Roberts, marks the trading app's debut as an IPO underwriter and the latest milestone in a five-year trend: retail investors taking a major role in capital markets.

The job title carries real weight. As an underwriter, Robinhood gets a say in the IPO process and a cut of the fees — a very small one, Roberts writes, but a cut nonetheless. That contrasts sharply with past IPOs, where retail brokerages merely received a tranche of shares to distribute and held an entirely passive role.

The shift began in 2020, when pandemic lockdowns pushed young people to spend their stimulus checks on stocks. That era produced the GameStop short squeeze and investing celebrities like Roaring Kitty, who shared his portfolio on YouTube. Wall Street initially dismissed the retail crowd as fools making eccentric picks — bankrupt Hertz and Bed Bath & Beyond among them — and expected them to disappear.

They didn't. Retail investors have not only stuck around since the pandemic but have grown more powerful and more sophisticated, Roberts writes. The proof showed up in this year's SpaceX IPO, where the allotment reserved for retail exceeded 20%.

Two forces drove the change. Retail brokerages pushed for their customers to get first dibs on IPO stocks rather than buying shares at a premium from the connected clients of big banks. And the companies going public themselves began to value retail investors as more than order-book filler.

Scott Coyle, CEO of Click Capital Markets, says executives taking their companies public now view retail investors as a source of stability for their stock. Unlike institutional investors, who rely on algorithms to dump underperforming shares at the first sign of trouble, retail buyers are more likely to stick around in good times and bad, Coyle says. He adds that CEOs of customer-facing companies — including the head of Jersey Mike's — see retail holders as a way to deepen brand loyalty.

The Oura delay

The Oura offering itself, which Fortune's Allie Garfinkle described this month as the year's hottest imminent IPO, was suddenly postponed on Tuesday. Robinhood's underwriter debut stands regardless.

Oura gave an unsatisfying explanation for the delay, claiming it foresaw "strong demand" but decided to wait due to "uncertainty in the IPO market." Some market watchers asked whether investors soured on the deal because Oura treated it primarily as an opportunity to unload secondary shares rather than raise capital. Others pointed to a tougher climate of higher interest rates and broader uncertainty as the market waits for the next two mega-offerings — OpenAI and Anthropic — to price.

The bottom line, per Roberts: retail stock buyers, who may have arrived in capital markets as tourists, are now a permanent and influential class of investors. Whether Oura prices successfully — and how large a slice retail claims — will offer the next read on how durable that seat at the table really is.