Retail Investors Are Transforming the IPO Market

Not surprisingly, June's mega IPO from SpaceX is drawing a record amount of activity from retail investors.

They placed more than $70 billion in pre-IPO orders and bought over $405 million in net shares on the opening market during the first week of trading.

And the IPO market is set to get even hotter in the fall.

Anthropic could make its market debut as soon as next month, and it's eyeing for a $2 trillion valuation that surpasses SpaceX.

Now joining me to break this down is Scott Coyle, founder and CEO of Click Capital Markets.

Scott, good morning and thank you so much for being with us.

Good morning.

Thanks for having me on.

All right, Scott, so take us through the current IPO environment and the increase in retail demand.

Uh, the current environment is, is super active.

I, I think we're gonna have a very busy, uh, next 18 months, uh, based on all the issuers we're talking to, as far as some of the major underwriters.

So I think it's gonna be very busy and.

What's happened on the retail side is there's an an explosion in smartphone use in the US and globally, and every retail investor wants access.

They want to buy all products from their smartphones, including IPOs.

Uh, so it's just, it's, it's much more readily available now, uh, to get access to these products than it ever has been.

All right, so I also want to talk and get your point of view on how is retail an investor base that looks and feels differently than it did historically.

Well, historically, retail and IPOs has had a bad name because many years ago, retail investors were attached to a financial advisor that would buy the IPO and be more interested in flipping it.

And nowadays, uh, more retail investors have access to, you know, AI analytics, and other things.

And so, they research these companies, and they tend to be more buyers and holders.

And you're, you're seeing that in like the SpaceX IPO.

Uh, the buying post IPO and the holding patterns have been, uh, from retail investors, and we saw it recently on Jersey Mike's as well.

Uh, retail's been the buyer and holder of that.

So, it's really, it's a, uh, it's a customer base in any issuer that that's going public.

If they want to, if they want a global brand opportunity, uh, giving those shares to retail investors has proven to be a, a very good value proposition for issuers.

Definitely.

And, and Scott, I want to get your point of view because why do you say companies should be actively trying to appeal to retail traders specifically?

Because at the time of your IPO you are going to be super high profile as an issuer, and now you have an opportunity to brand uh your business, whether it's retail, or if it's uh an enterprise business, you can brand it at the time of your IPO with globally with retail investors.

And there's all kinds of studies that when you have When somebody buys your stock, they tend to also buy your products.

So, it's just, it's, it's a huge opportunity that, that, that did not exist, but because of technology, it exists today, you know, that's why we built the Click Capital Markets platform.

We have an API connected to Over 100 million people in the US and globally.

And it's just, you, you didn't have this branding opportunity as an issuer, you know, 5 or 10 years ago.

But when you go public, you do, provided you give a, a major portion of your IPO to retail investors.

All right, Scott, so you touched briefly on it.

So I want you to give us a background on your company, Click Capital Markets and what you guys are looking to solve.

So we're so we formed Click Capital Markets because we felt like retail investors did not have access to many capital markets products, specifically IPOs.

So we've placed Over 450 offerings, uh, through our platform since inception.

Probably 330 of those have been IPOs.

But what we've done is, we've got an API embedded technology that's connected with online broker dealers in the US and globally.

And this allows, you know, sort of one pipe going into the issuer and the underwriter when a company goes public.

So, we're just, we're making it easier for retail investors to get access to, uh, these IPOs, these companies that are coming public.

And Scott, how does click support, reach and connect companies to broker deals and retail investors?

We do that through an API.

So our API is embedded in over 20 broker dealers in the US and globally.

We have over 100 million people on this pipe now.

That number is going to be close to 30 or 400 million by the end of the year based on new integrations we're doing.

So that end investor places an order.

It routes from their broker dealer all the way through click, and we aggregate those orders, and we reflect, we reflect those orders to the lead underwriter and the issuer.

So the advantage the issuer has through Click.

They can see this demand curve, uh, building, uh, very quickly.

And based on that demand curve, we can even give them pricing advice on how to price it, uh, things like that.

We worked very closely with Bullish when it went public.

We worked closely with Figer Markets, uh, and a number of other companies.

Jersey Mike's was a recent one we worked really closely to.

So, we just, we make it easier for the end investor, and we give the data and analytics that the issuer needs to make decisions on, you know, distribution, and the final price of the IPO, right?

We can help them price it better than they could otherwise, because we have a global look at demand, uh, versus just what they see in the institutional book.

And, and I also want to get your point of view.

Are you in favor of expanded private market access or is the current IPO market serving businesses and retail traders alike?

What are your thoughts, Scott?

I think, I think you're gonna see expanded private market access.

I mean, really, really what that's about is individual investors that need the growth can't get it, and everybody that already gets the growth doesn't need it, right?

So, individual investors want access.

So, I see the private market continuing to expand, but really what they're trying to do with the, in the private markets is make it kind of like a public market.

So, if With, with many of these companies, if they think about going public sooner in the process, they've got, they've got that branding opportunity they need.

Liquidity comes owner, comes earlier in the process for many investors.

So, I, I, I see it continuing to grow, but I also see the, I, I see the rotation, the public market becoming more robust because of it, cause it's, it's really, it's, it's just easier for the company to go public than it is.

These private raises are still, they're still a little bit clunky.

All right, and Scott, to wrap up we have less than a minute left.

So I want to get your thoughts.

What do you expect to see in terms of retail activity this fall surrounding the highly anticipated IPOs coming up?

I see, you know, huge retail interest, you know, a number of these, I don't want to talk about any company specifically.

I'm, I'm a licensed broker until, so until that prospectus is available, we're limited on what we can really talk about.

But many of these brand names that are coming, you're going to see huge retail demand.

It, it, it will be massive.

Um, and, uh, you know, retail is gonna be in there at the IPO and they're gonna be huge buyers in the aftermarket.

And I think the more The more these companies can allocate to retail at the IPO, it's going to be better for the ecosystem.

It'll be better for the company long term.

There's going to be a major shift in how IPOs are allocated in the future.

A huge piece of it, 50% or more, is going to go to retail, in my opinion.

Awes awesome.

Well, Scott, it's definitely gonna be interesting to see what happens and how this all plays out.

Again, thank you so much, Scott Coyle, founder and CEO of Click Capital Markets.