how to become a stock trader

Is There a Way to Get Free Stock on Robinhood?

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As of March 2020, Robinhood Markets, Inc. had more than 10 million users who looked to the company's app to trade stocks, options and exchange-traded funds (ETFs). It's registered with the United States Securities and Exchange Commission and is a member of the Securities Investor Protection Corporation.

Users love the Robinhood app because it's free to use to trade on the stock market, and it's easy to use with just a few swipes of your mobile device. You don't need much money to get started, and the app provides you with research on almost every stock, including whether analysts recommend buying, selling or holding. Another benefit is that when you sign up and make your first trade, you can earn free stock.

First, Open Up an Account

Before you can get a free share of stock on Robinhood, you have to sign up for an account. You can do that by downloading the app to your smart device or visiting the website at Robinhood.com and clicking "sign up." In its earlier days, you had to deposit at least $10 from your checking account to get the free app, but today, it's as simple as signing up. Don't try to open another account to get more free stock, however. Only one free share is available per person. You can sell your free share after two trading days.

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To sign up for an account, you must be at least 18 years old and have a valid Social Security number. You must also have a legal residential address within the U.S. or Puerto Rico, and you must be a U.S. citizen, permanent resident or have a valid U.S. visa. If you're in the military and stationed overseas, the company may make an exception for you.

If You Want More, Recommend a Friend

Another way to get a free stock share is have your friends sign up. Once you have an account, you can invite people you know. To do this, go to your account page and click on "invite friends, get free stock." Then, access your contacts and click on the people you want to invite.

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If they sign up, Robinhood will give you each a free stock. Keep in mind that you can earn up to $500 worth of free stock each year, so you can invite as many friends as you like up until you reach that threshold.

How Does Robinhood Pick Your Stock?

Robinhood has an inventory of shares of stock, and your free one will be pulled from that collection at random. This means you may not receive the same stock your friends do. While Robinhood's inventory of stocks run from roughly $2.50 to $200 per share, you have a 98% chance of getting a share that is worth around $10 or less. Keep in mind that market fluctuations will also impact the value of the stock you receive.

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For tax purposes, you'll receive a 1099-MISC form for the amount of the free stock you receive from the company at the time you receive it. If the price rises before you sell it, you'll report that money as capital gains. Always make sure you check Robinhood's terms and conditions regarding the free stock, as they may change from time to time. Make sure you claim your free stock within 60 days of receiving it or the offer will expire.

Which Stocks Can You Get for Free?

Robinhood claims that its inventory of stocks is from the most popular companies on the New York Stock Exchange.

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While the odds are low of getting a high-dollar stock, past users have earned free shares from the likes of Facebook, Microsoft, Sprint, Ford, Apple, Visa, Johnson & Johnson, Kinder Morgan, PG&E Halliburton or GoPro. The stock you'll receive depends on what's available in Robinhood's inventory at the time.