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 $2.50 and $200.
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.
This does not mean it is impossible to receive that $200 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.
Robinhood has you covered. Simply contact them at robinhood.com/contact and customer service will help you to receive your free stock.
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.
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 both be given a free stock valued between $2.50 and $200.
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.
There are limits to this referral program put in place by Robinhood. Robinhood allows for up to $500 in free stock per year per account. By referring your friends, they will still receive their free stock for opening up an account with your referral link.
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: