The world of investing has changed a lot in the past decade as brokerage services have made it easier than ever to execute trades at no extra cost. At the forefront of this zero-commission revolution is Robinhood who also is in the spotlight for its free stock program that is going on right now.
Brokerages like Robinhood are looking to acquire new customers, and one way to accomplish this is by incentivizing them with a free stock! When you open a new account with them, you get a free stock. Then, you can refer friends to earn more free stocks!
That being said, here is everything you need to know about the Robinhood free stock promotion.
Robinhood’s free stock promotion is simple. Open up a brokerage account using the link below. Then, once your account is approved, you get to scratch off a free stock!
Robinhood prioritizes the largest, most popular stocks being bought on its platform to offer to its new clients. Typically, priorities include large market-cap names that have high trading volume.
These shares are chosen at random from Robinhood’s inventory of “settled shares."
Due to the randomness of the system, it is impossible to calculate the average value of the share that you will receive. Robinhood makes an estimate on its website, however.
The value of the free stock is a range between $3 and $225!
Robinhood made a statement about the value of the free stock on its website saying that 98% of the stocks offered will be worth between $2.50 and $10.00.
Also, there's approximately a 1% chance of the stock bonus having a value of $50 - $200 according to their website.
This does not mean it is impossible to receive that $225 stock that you are looking for. Though it is a low chance, this program is a win-win situation for all investors opening up a brokerage account with Robinhood. $5.00 or $50.00, free on Robinhood really does mean free.
No. Robinhood only allows one account to be opened per person to restrict abuse of their free stock promotion.
However, you can invite friends and each of you will get a free stock when you do this. By referring friends, you can earn up to an additional $500 in free stock! Not to mention, that $500 limit resets every year.
Want another free stock? Robinhood allows its clients a referral link that they can send to their friends. When your friend signs up, you will each be given a free stock valued between $3 and $225.
You can invite friends in a very simple 4-step process on Robinhood’s app:
It is as easy as that. Invite as many friends as you would like and claim the rewards from the referral program.
Robinhood has you covered. Simply contact them at robinhood.com/contact and customer service will help you to receive your free stock.
Yes, Robinhood allows you to sell this free stock after 2 trading days. Trading days are the same as business days. So, if you receive a free stock on a Wednesday, you can sell it on Friday.
Investors using Robinhood have two options when deciding what they want to do with their new stock. They can either hold the stock, betting on it appreciating in value, or after two trading days they can sell it.
A “trading day” is a day when the market is open. The market is typically open Monday - Friday, depending on the holiday schedule. Understand this if you are looking to sell your free share immediately. Your sell order will have to wait at least two of these days.
In general, this could be a great way to score some free cash to start investing with. Personally, one of the free stocks I got from Robinhood was Microsoft, now worth over $200!
The short answer here is yes, you pay taxes on your free stocks.
The value of the stocks that you receive from the referral program are reported as “Other Income” on the 1099-Misc tax form. When the stock is sold, the gains are reported as capital gains or losses and subject to federal income taxes.
Here is an example to help you understand:
As the tax system stands today, your free stock income will likely be taxed at the same rate as the income you get from your job. However, we are not your tax advisor so make sure you check with your tax person before taking any action with regard to taxes.
In a nutshell, Robinhood is currently offering 1 free stock when you open an account and fund it with any amount of money. At the time you receive that stock, it will be worth between $3 and $225 as of the most recent promotion. You are allowed to sell this stock in 2 business days.
If you want more stocks, you can invite friends. This is an easy way to earn up to an additional $500 per year in free stocks.