Robinhood: Free Share of Stock for New Users – Estimated Value

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Robinhood is a sleek smartphone app that’s a brokerage account with unlimited $0 trades with no minimum balance requirement. They’ve been around for a few years now and I’ve been impressed that they’ve kept up the free trade business model, partially by recently rolling out premium paid features. I enjoy the minimalist and intuitive interface.

Right now, if you a referred by an existing user you get a free share of stock. The existing user also gets a free share, so thanks if you use it! As I write this, that share is randomly selected from a pool of “widely-held companies”, which includes Apple ($158), Facebook ($172), or Microsoft ($75). Too bad they don’t offer Berkshire Hathaway Class A shares ($274,000). Okay, but there are also shares of companies that are worth $1 or less.

What share value should I expect? Here are screenshots from my phone showing some odds:

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For some reason they try to use the World’s Smallest Fine Print™, but here are selected details from their FAQ:

The stock bonus is one share selected randomly, when the bonus criteria are met, from Robinhood’s inventory of settled shares held for this program. When shares are purchased into this inventory, Robinhood purchases shares from the three to four companies representing the highest market capitalization in various ranges of share prices between approximately $3 and $175, limited to those companies that are widely held among Robinhood accounts. There is an approximately 98% chance of the stock bonus having a value of $2.50-$10, an approximately 1% chance of the stock bonus having a value of $10-$50, and an approximately 1% chance of the stock bonus having a value of $50-$200, based on the price of shares at the time of purchase. The Robinhood platform displays approximate odds of receiving shares from particular companies at the time the screen is generated. These odds do not necessarily reflect the odds of receiving stock in those companies at the time the stock bonus is awarded.

So… basically 98% chance of getting something $10 or less, and 2% chance of something higher. This means the weighted average share price can’t be more than ten bucks.

By the way, you can cash out your bonus by selling after 2 days and withdrawing your balance after 30 days:

Limit one offer per qualified referral with a maximum of one account per referred client. Stock bonus will be credited to the enrolled account within approximately one week after the bonus is claimed. Stock bonuses that are not claimed within 60 days may expire. Shares from stock bonuses cannot be sold until 2 trading days after the bonus is granted. The cash value of the stock bonus may not be withdrawn for 30 days after the bonus is claimed.

Bottom line. The Robinhood “Get Free Stock” promotion is clever and it certainly appeals to the hopeful gambler within us with a $200 potential value, but most people are likely going get a share of stock valued at $10 or less. (Don’t sell it and wait 30 years – see what happens!) I would just treat as a fun game if you otherwise want to be able to trade stocks for free on your smartphone. Robinhood is a good value on its own, see my full Robinhood review.

Sign up for Robinhood and get your free share here, and I’ll report back on any shares that I win.

Comments

  1. Hi Jonathan,

    I have been reading your blog for a while and really enjoy them. I just used your referral for the Robinhood and opened an account. I am new to investing but this sounds quite straight forward. I look forward to exploring more.
    Thanks for all the great info.

  2. Jonathan,

    so besides BofA and Vanguard, you have these guys as “play money” or do you actually trade with them?
    What about their fee structure? I’ll hold the share, but I doubt they will last that long, though.

    Do you use other brokers?

    • For me, Robinhood is “play money” and a backup if BofA/Merrill Edge changes their terms. I know a lot of people don’t have tens of thousands to park at Merrill Edge though. The rest of my primary assets are at Vanguard and Fidelity 401k. Just like with 2% cash back cards with no annual fee, I tend to collect free trade brokers with no account minimums as they have disappeared in the past.

  3. Hm. The referral page appears to be having an issue. The link leads to an error. Maybe the site is taking too many hits?

    ERROR
    The request could not be satisfied.
    CloudFront wasn’t able to resolve the origin domain name.

    Their main site seems to be working fine.

  4. I used the link you provided, followed the instructions, linked a bank account, and made an initial account funding. No free stock.

    • Correction! I found the info. I got a share of Sirius XM (SIRI) worth $5.45.

      Well, it’s worth more than a dollar, so at least I didn’t roll snake eyes.

  5. I just signed up using the link and would like to refer some of my friends and family to do the same. How long does I have to have my account open/funded before I’m able to refer new sign-ups?

  6. How does Robinhood handle tax consequences?

    • You mean, in terms of the bonus? The fine print (quoted below) states that they may report this on a 1099-MISC. If they do, then they would be the first brokerage to do so in my experience.

      For taxable accounts, the value of all Robinhood offers received may be reported as Other Income on a Form 1099-MISC where required by applicable rules and regulations.

      • I can understand that if you roll a seven and get a share of stock worth hundred(s) of dollars. But for cheap stocks under $10, I wonder if it would be worth it to them or the IRS?

  7. Hi Jonathan, this is great. I love the idea of no fee trades! I just enrolled but they did ask for a lot of info. How has your experience been with Robinhood? I would love to hear from anyone that signed on. Thank you.

    • Their backend is Apex Clearing, which is the same clearing firm that powers other brokers like TradeKing (now Ally), Betterment, Wealthfront, SogoTrade, FirsTrade, Acorns, and more. So they are legit, if that is the question. Robinhood provides the interface (and free trades).

  8. Thanks to everyone who used my referral link! Robinhood says that the referrer and referred may not receive the same stock because the shares are chosen randomly. So far I have gotten one share of CHK and three shares of GRPN.

  9. Thanks for the wonderful information and free shares 😀

  10. Can anyone tell me if I can access Robinhood on either my MacBook or on a PC? It seems that I can only access it on my iPhone. Thank you!

    • Robinhood is officially only supported on smartphone app. There are third-party websites that use the API, but you’d have to provide them with your Robinhood username and password.

  11. Me too. Chk. Drive safely everybody.

  12. Is there anything I need to do aside from signup?

    • Yes, once you sign up, then you have to link your bank so you can fund your account. You can also recommend a friend. If they sign up, you’ll both get randomly selected shares. Good luck.

  13. I got CHK. $4.36 is usually not enough allure me but I was curious anyway and the appeal of potentially getting $200 made me go for it.

    • $4.36 may not be enough to lure you but add to that $4.95 (which is probably what you’ll pay for an online brokerage account) every time you buy and then again every time you sell. Those fees can really eat into your profits.

  14. Marlene J says:

    My sign-up bonus share was GRPN. Okay with that.
    Still waiting on my bank verification. The 2 small amounts Robinhood says they put there haven’t shown up…time to contact them and sort that out today.
    I like the app, pairing it with Yahoo Finance Watchlist I’ve had for years (and know my way around), and curating some reading–including now MoneyBlog.com. Thanks for the sign-up link.

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