Millennial investors are very interested in Dropbox and Spotify IPOs, says company selling fractional shares

Key Points
  • Not since Snap's IPO a year ago has Stockpile seen this level of consumer interest in upcoming IPOs.
  • Stockpile customers are excited about Spotify and Dropbox because they like to "buy what you know," said CEO Avi Lele.
Daniel Ek, chief executive officer and co-founder of Spotify AB.
Akio Kon | Bloomberg | Getty Images

Since Snap's IPO a year ago, there's been a dearth of new offerings to entice millennials. That's about to change with Spotify and Dropbox slated to soon start trading, and a service for young investors is gearing up for the excitement.

Stockpile, a website that lets people buy stock in the form of gift cards and purchase fractional shares in companies, is fielding a growing number of emails from customers asking when they can buy shares in music streaming service Spotify and software developer Dropbox, said Avi Lele, the start-up's CEO.

Two-thirds of Stockpile's account holders are under age 35, and among the most popular stocks for them to buy are Apple, Amazon, Alphabet, Facebook, Tesla and Netflix, Lele said. For Spotify and Dropbox, investors can use Stockpile to order shares when they begin trading, though the purchases won't go through until the market close that day.

Based on what customers are telling him, Lele expects both offerings to resonate with his audience because they're popular services that consumers use all the time.

"They're perfect examples of buying what you know and what you use on a daily basis," said Lele, who was a lawyer for 15 years before co-founding Stockpile in 2011. "There are a lot of stocks that go public that our audience, and people in general, aren't that familiar with."

It's by no means an easy way to make money. IPOs typically get a first-day pop, but Stockpile customers can't get in at the initial price or at any point during that day. They can put in orders, which will clear at the end of the day and can cancel before the order goes through if they decide the price has risen (or fallen) too much for their comfort.

Lele said the only other IPO that's gotten this kind of buzz on Stockpile is Snap, a consumer app that fits right into his demographic. Anyone who bought Snap after its opening day is down 31 percent.

Dropbox, which has over 500 million users, is scheduled to debut on Friday at up to $20 a share, based on the increased price range. Wherever the final IPO price ends up, only a limited number of institutional investors will be able to buy at that level. Retail investors have to wait until after the initial pop, assuming there is one.

Spotify has 159 million monthly active users and 71 million premium subscribers. The company's offering in early April will be unconventional in that there are no underwriters determining a price ahead of time.

'Easy and affordable'

Stockpile charges 99 cents per transaction, regardless of the size of the purchase, which is much less than $5 to $7 fees from companies like E-Trade and Charles Schwab. Robinhood, another start-up brokerage service, doesn't charge anything for stock purchases.

For investors who prefer not to pick stocks, Stockpile has plenty of index funds. But Lele said most customers enjoy being able to simply put $25, $50 or $100 to work in brands they know and love. With fractional shares, investors don't have to be able to pull together over $1,000 for a share in Alphabet or Amazon.

"We're all about making it easy and affordable for anyone to invest and build wealth for the future," Lele said.