2019: Is a friend referral offer to get a free stock for opening an investment/brokerage account on Robinhood app legitimate or a scam?

Is Robinhood Free Stock a Scam?

If you’ve signed up for a Robinhood Financial account, chances are you’ve heard of their unique referral bonus where they promise a free share of stock from a random company for both you and your referred friend. Many people have been asking if this is a legitimate offer or a scam. We want to let you know that it is 100% legitimate and there are even copycats: Robinhood's main competitor, WeBull, offers 2 free stocks promo to start investing with them. We will go over the details and how to qualify in this article.


Robin Hood Free Stock


How the Robinhood's Referral Program Works

In the bottom right corner of the app tap the Account icon and it will take you to the below screen, where you want to tap “Invite Friends”. For every friend that you invite that applies for a Robinhood account you will both receive one free share of random stock. It’s important to note that you need to have invited the friend to apply for an account via this screen before the friend applies for their Robinhood account, and their account application must be approved.

Your stock bonus will be credited to your account within approximately one week after the bonus is claimed. The bonus may expire if you do not claim it within 60 days. The free shares cannot be sold until two trading days after it was credited to your account, and the cash value of the free shares cannot be redeemed from your account for 30 days.


Robinhood Promotion


Open Robinhood Account


WeBull Promotion


Open WeBull Account


How Does Robinhood Choose the Free Stock?

The free stock shares you and your friend receive may not be for the same company as they are randomly chosen from Robinhood’s inventory of settled shares that are set aside for this program. The shares will be worth between $2.50 and $200 and are selected from among the most popular and largest companies that are traded by Robinhood accounts. Robinhood selects the shares for this referral program from a universe that consists of the three or four companies with the largest market capitalizations within various price ranges between $2.50 and $200.


What Are My Odds of receiving a $200 stock?

While Robinhood Financial mentions Apple (AAPL) as one of the companies whose shares are included in the free stock referral program, as you may have guessed, your odds of getting a share of AAPL are pretty low. Robinhood places the odds of getting a free share that’s worth between $50 and $200 at just 1%, which is the same as your chance of getting a free share valued between $10 and $50. In reality, you (and your friends) have a 98% probability of getting a free share worth between $2.50 and $10.


Is There a Limit?

Robinhood’s referral program limits the amount of free shares each account can receive to $500 worth of free stock. So if all your referred friends sign up and you get $500 worth of free stock you won’t receive any more free shares for future referrals, however your referrals will still get the free share.


Are There Any Tax Implications?

The cash value of the free shares you receive may be reported as “Other Income” on a 1099-Misc form and therefore subject to taxes. Any capital gains (or losses) that are realized when and if the free shares are sold would be considered capital gains (or losses) and taxed accordingly at year-end. For example, if you received a free share worth $20 and sold it after a year for $30, your year-end taxes should reflect “Other Income” of $20 and a capital gain of $10.



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