should I sign up for robinhood

[mistymoney]

just to get a free stock??

I'm greedy. It's free.

Any downside?

I already have tdameritrade and vanguard accounts....I don't like too many places.


But I like free....

[ZaraThustra]

I signed up a few years ago, got one free share of Chesapeake Energy. Sold it.

Reported the one share on my taxes. Cost basis set to 0. 4 bucks gain.

Other than inconvenience, no perceived downside. I remember jumping through hoops to delete acct, though.

[Blender Bender]

Robinhood is not really free. There is an extra thick spread for buy/sell, more than typical investments brokers.

So, if you trade often (and smaller transactions) then it seems worthy since no transactions fees.
But for passive investing, when you buy less often but bigger amounts, then the cost of the spreads will be more than the cost of such transactions.

So, there is no a free lunch, as usual.

"Payment for order flow is typically paid on a per share basis. Robinhood, however, receives a fixed rate per spread which is higher than the average rate the other major brokers receive."

https://www.cnbc.com/2020/08/13/how-robinhood-makes-money-on-customer-trades-despite-making-it-free.html

[mistymoney]

Robinhood is not really free. There is an extra thick spread for buy/sell, more than typical investments brokers.

So, if you trade often (and smaller transactions) then it seems worthy since no transactions fees.
But for passive investing, when you buy less often but bigger amounts, then the cost of the spreads will be more than the cost of such transactions.

So, there is no a free lunch, as usual.

"Payment for order flow is typically paid on a per share basis. Robinhood, however, receives a fixed rate per spread which is higher than the average rate the other major brokers receive."

https://www.cnbc.com/2020/08/13/how-robinhood-makes-money-on-customer-trades-despite-making-it-free.html

so this means you buy a little higher/sell a little lower?

That can really add up. and seems their clientelle trend high volume of small quantities, based on the reddit crowd stuff.

[Blender Bender]

Yes, this is how it looks from the user point of view.

[ZaraThustra]

Yes, this is how it looks from the user point of view.

Would you still sign up for a free share lottery type deal? I thought that was the OP, but good to know that it's not an ideal trading platform.

https://robinhood.com/us/en/support/articles/open-account-get-free-stock/

[Blender Bender]

I'm Canadian and no Robinhood here.

Around two year ago i was wandering how RH can make money (new comp, no other sources). I was suspecting of the extra spreads.
Later i did some more research and found that they are there, but smaller that i assumed. My conclusion was: not so bad.
Note that that was some time ago, and the number could changed meantime. But the fact remains that this is their income source (rather than transactions/users fees). And this is fair. Just they were not transparent with this. I was always appalled by people saying "free free" :)
Also, there was some collusion with RH's service provider. This is another matter. I a way: "i use your service, not looking for cheapest, but let me take the extra take".

Spreads are always existing, no matter what. So spreads for normal brokers, when users transacting less volume during specific day etc could be bigger than those "normal" RH spreads.

So matter of perspective. If i would be doing more active investing, with more trades per year, i would probably use RH. Ignoring the annoying gamification etc.

A free share lottery type deal? Maybe worthy? Just not my thing. I don't like freebies (for my personal data?), i have no luck in lotteries. Just personal take.

[MustacheAndaHalf]

just to get a free stock??

I'm greedy. It's free.

Any downside?

I already have tdameritrade and vanguard accounts....I don't like too many places.


But I like free....

What if they paid you a $10 sign on bonus, and you had to stay 6 months?

My impression is that most people get stocks worth less than $10.  But they've got you thinking like a gambler - you might win the lottery, and get more.  Consider for a moment what that says about the people they want.

[NoEllipsis]

It's very little work for ~$10, maybe 25 minutes spread out over a number of days. You have to sign up, you usually have to link a bank account, wait for that to clear, sell the stock later, cash it back out...

I did the same thing with WeBull, signed up for the free stock, referred my girlfriend for another free stock for each of us then sold and left. I don't think RobinHood is a great platform overall. Perhaps it's mobile version is a little better but I still feel like other platforms seem better on computer. Also after their Gamestop shenanigans I would just rather not give them my business. But that doesn't mean I won't take their free stock. They just want people to try to see if they like the platform, if someone trying it out for the free stock actually likes it and stays then they win. They WANT you to just try it out to see.

Also some of these places let you to refer someone to get more free stock. So that can double the amount to ~15-20 dollars for your time which is even better. It's mostly just waiting time for your referral to go through to get another free stock.

[mistymoney]

thanks all, I was envisions going along with a small trading account there, but if it is a suboptimal financially, I don't think it is worth the bother for me to open.

appreciate the conversation and information.