Summary
With a name like “Robinhood,” the company didn’t try to hide its mission to level the playing field and make the stock market available to regular and wealthy people. Since its inception, Robinhood has delivered on its promise of providing commission-free stock and ETF trades, and in late 2019, some of the top brokerages in the country followed suit.
When assessing how to buy Robinhood (HOOD) shares, there are a few things to consider. Consider Robinhood’s predicted performance, earnings and revenue reports, and other financial data to see if the company is a good fit for your investment portfolio. You can discover this information using the research tools provided by your online broker. To purchase Robinhood stock, you will need a brokerage account, which you can set up fairly quickly. Find an online broker that meets your needs by providing top-notch customer service, a diverse range of investment options, minimal or no fees, and no commissions on stock trading.
According to financial gurus, investing in Robinhood, or any other specific stock, should represent a relatively small percentage of your overall portfolio (5% – 10%). Investing only money you won’t need for at least five years is another smart rule of thumb. This guide will offer a detailed insight into Robinhood shares, the broker to choose from, its regulations and platforms, and user reviews on Quora and Reddit.
After you’ve decided to invest and have determined that Robinhood has the requisite elements to create income, grow the business, and remain competitive, purchasing its shares is simple. The step by step guide is given below:
- Select an Online Stock broker
- Create a Brokerage Account
- Deposit Funds
- Buy Robinhood Shares
- Manage your Robinhood Positions
Potential investors can gain exposure to the brokerage industry’s growth and disruption by purchasing Robinhood stock. With its innovative business strategy, Robinhood has changed the way many people invest and trade, making it popular, especially, among younger investors. Here are the pros and cons of buying Robinhood shares.
Pros
- Affordable
- Growth Potential
- Increasing Popularity
Cons
- Risky Investment
- Volatile
- Regulatory Risk
When buying shares in Robinhood, considering the following factors before investing is always a good idea.
Commissions & Fees
The term “commission” is commonly used to describe the cost levied by online brokers whenever a client buys or sells shares. Nonetheless, the landscape of online brokerage has changed significantly with the emergence of commission-free trading. With zero commission, investors can acquire shares without paying a separate fee to their broker for executing the trade. This shift has democratized investing by lowering the barrier to entry, particularly for those who hefty commission fees may have put off in the past. Investors should also be aware of other possible expenses when buying Robinhood shares, such as account maintenance or transaction fees, even if they can trade with zero commission. It’s worth noting that eToro and Capital.com are two popular online trading platforms offering share and CFD trading commission free.
Stock Brokers Regulation
Online brokerages are subject to strict regulation from organizations like Australia’s Australian Securities and Investments Commission (ASIC), the UK’s Financial Conduct Authority (FCA), and Cyprus’s Securities and Exchange Commission (CySEC). To safeguard investors’ interests, these organizations mandate that brokerage firms follow certain practices and procedures and keep all client information completely transparent.
It is important to be sure a reliable organization supervises the online brokerage platform you choose before you buy Robinhood shares there. Periodic audits and examinations are performed on regulated online brokers to check their financial health, risk management procedures, and legal compliance. Brokers are also responsible for advising their clients of key details regarding their services, including any applicable fees, charges, and dangers. Anti-money laundering and customer identification laws must be adhered to, and the broker must keep clients’ money in separate accounts, all of which are aided by regulatory scrutiny.
Trading Platforms
When you sign up with a broker, you’ll have access to various state-of-the-art trading platforms. A trading platform is available for every type of trader, from simple mobile apps to robust desktop versions and easy-to-use web-based choices. Furthermore, traders can check in on their accounts from anywhere using mobile apps, place orders, and view market data in real time. Traders who prefer a more full and sophisticated experience can do so with desktop programs.
Accessible via web browsers, web-based platforms provide versatility and ease without requiring the user to download and install any additional software. Moreover, depending on their needs, brokers may provide their clients with custom-built platforms to buy Robinhood shares.
In addition, these firms may grant you entry to alternative trading platforms. These systems, created by third-party programmers, include sophisticated charting tools, algorithmic trading options, and social trading networks. The choice between proprietary and third-party platforms further offers flexibility and customization options to enhance the trading experience.
Leverage Availability
Leverage gives the opportunity to open more positions in the stock market, hence more market exposure than what the investment capital can do. Regardless, it’s important to understand that leverage also magnifies the risks involved. Keep in mind only some stocks are eligible for leverage. Like other trading and investment opportunities, it has its share of potential downsides. You can win if you use strategy and play it safe. Always be mindful of the risk of becoming over-leveraged. If something goes wrong, it might swiftly deplete your funds.
When utilizing margin accounts to buy Robinhood shares, it is essential to keep a few important considerations in mind. Firstly, your brokerage business may insist that you keep a minimum balance in your account. Furthermore, leverage is frequently stated as a ratio. Therefore, if you hear that you have a 1:2 leverage in the stock market, you can borrow twice as much money from your broker to make your transaction. Depending on the regulations in their home countries, various consumer-based online platforms offer leverage ratios between 1:2 and 1:10.
When trading stock CFDs, Capital.com offers its retail clients throughout the world a 1:5 leverage. Australia’s eToro and the UK’s eToro both offer leverage of up to 1:5. In comparison, eToro (Seychelles) Ltd. offers a maximum leverage of 1:10 to its clients.
Robinhood Stock Performance
In July 2021, Robinhood shares began trading on the NASDAQ with the ticker code “HOOD.” Monitoring a company’s stock performance helps investors make informed decisions and understand the potential risks and rewards. When considering how to buy shares of Robinhood, it is indeed wise to assess its stock performance.
On August 4, 2021, the stock price of Robinhood Markets reached an all time high of $70.39 at market close. Currently, the $9.89 Robinhood’s stock price is 74.47% down from its IPO price of $38. The 52-week high for Robinhood stock is $12.76, or 34.3% over the stock’s current price. Some investors may be alarmed by Robinhood’s steep fall, but the company has had to overcome obstacles in a falling stock market.
Robinhood Past Dividends
Dividends are typically distributed by established companies that generate profits and have a history of sharing a portion of those profits with their investors. Since its IPO in 2021, Robinhood has been laser-focused on expanding its user base and making investing simple for everyday people. When considering how to buy Robinhood (HOOD) shares, remember that Robinhood does not yet distribute dividends to investors of “HOOD” stocks. As not all stocks, especially those of newer or growth-oriented companies, offer dividends, even though dividends might be enticing for investors seeking regular income from their assets.
To achieve their dividend income goals, investors may need to look at stocks of other companies or other investment possibilities offered by the Robinhood app.
Brokers generally offer many trading platforms to clients who wish to purchase securities, such as Robinhood shares. These platforms can be found in various forms, including web-based platforms, mobile apps, and desktop programs. Let’s go deeper into each of them.
Desktop Trading Platforms
Online brokerages offer trading platforms for desktop computers tailored to their clientele’s needs. For instance, eToro provides its customers with a state-of-the-art web platform where they may buy Robinhood shares and apply a wide variety of stock trading methods with the help of sophisticated tools.
HOOD stocks CFDs are available on Capital.com, another reputable online trading and investment platform. Their one-of-a-kind service gives users access to several technical indicators, chart types, and data sets. In addition, several brokers provide access to MetaTrader 5 (MT5), a widely used trading platform praised for its user-friendliness and speed of execution, especially among novice computer users.
The current asset price, among other pieces of information, may be accessed quickly and easily thanks to the streamlined layout of the user interface. Because of the many trading options it provides, traders worldwide have trusted the website.
Mobile Apps
With the proliferation of mobile trading apps, investors and traders can now monitor their accounts, make trades, and remain in touch with the market from virtually anywhere. Mobile trading apps provide traders the same powerful features and access to real-time market data as their desktop versions, allowing them to manage their portfolios and place trades regardless of where they are.
Trading platforms from MetaQuotes, such as MT4 and MT5, can also be downloaded into mobile devices and are offered by some brokers. Traders can perform various tasks, like reviewing past transactions and conducting an in-depth analysis using chart patterns, with the MT4/MT5 mobile app. Capital.com, for instance, features an industry-leading stock trading app for mobile devices that includes technical analysis, price alerts, and order restrictions. Similarly, eToro, another well-known platform, offers customers a cutting-edge mobile trading interface.
Before committing to buying Robinhood shares, it is in your best interest to conduct a thorough analysis of all applicable fees and transaction expenses. These costs can be broken down into trading and non-trading fees.
Trading Fees
The costs incurred by purchasers and sellers of Robinhood stock include spreads, commissions, overnight and rollover\ swap fees, and so on. Keeping a trade open overnight incurs what brokers call an overnight, rollover, or swap cost. When trading, the spread is an extra cost. When purchasing or selling stock, the spread is the amount by which the purchase or sale price deviates from the asking price. Additionally, if the brokerage charges a commission, it could add 1% to the cost of purchasing shares through them.
Non-Trading Fees
The term “non-trading fees” refers to any costs not directly associated with trading. For instance, if no trades are made within a certain time frame, brokers may charge inactivity fees. The safekeeping of clients’ stock portfolios may incur additional custodial fees. Depending on the broker and the withdrawal method, withdrawal costs may also be associated with the brokerage account.
Buying shares in Robinhood in a currency other than the account’s base currency may incur currency conversion fees. Finally, depending on the broker and the method used, fees may be associated with depositing funds into the brokerage account. When calculating your potential return on investments, factoring in these fees and costs is essential. Making informed selections and optimizing the investment process can be aided by conducting in-depth research and comparing the fee structures of various brokers.
About Robinhood (HOOD)
Two ambitious Stanford Graduates,Vladimir Tenev and Baiju Bhatt founded Robinhood in 2013. The company was named after the English folk hero, Robin Hood, who was known for robbing the wealthy and giving to the poor.
It was this app that sparked the movement towards commission-free trading, eventually leading to practically all brokerage platforms doing away with trading commissions altogether. By the end of 2019, a few top brokerages in the country started offering the same commission-free trading of stocks and ETFs, following the lead of Robinhood. Because of Robinhood, online brokerages were forced to compete on price while still providing the same or better services and user experience. The company has a market cap of $8.58 Billion as at the time of writing this article. Moreover, in 2022, there were 0.877 billion Robinhood Markets shares outstanding, up 78.5 percent from the previous year.
When assessing how to buy Robinhood (HOOD) shares, note that the share price of Robinhood can be influenced by various factors. These factors include the company’s financial performance, market conditions, regulatory environment, competition, and public perception. Furthermore, user growth and engagement in the company’s trading platform and the trading volume eventually affects the share price. Investors should consider these factors alongside their own investment goals and risk tolerance when evaluating Robinhood shares.
You should gather a variety of opinions from traders who have traded or are currently trading Robinhood stocks before you invest in the company. In order to accomplish this, we have combed through Reddit and Quora user comments.
While searching through Reddit, we found many threads discussing the stock performance of Robinhood shares. User sentiments on the platform were mixed. Some were optimistic about the Hood shares, while others were disappointed.
This user, “invisiblebBlueRobot,” states that Robinhood stock will likely struggle for a while. He thinks the stock can rebound, but this will come after a market recovery and other stocks and crypto trading well higher.
Another Redditor, when asked how to buy Robinhood (HOOD) shares, explains that the company is still not profitable and had a net decrease in users and trading. He added that if a company is a new growth company, it can lose money as long as it grows, usually in hopes that it eventually becomes profitable once it grows so much.
Quora
We found many discussion posts about Robinhood shares during our search through Quora. Many users in Quora had positive views about its stock performance, while some had doubts.
This user “Martha Stokes,” told others that the company is a new company that brings in huge capital to grow. Most IPOs like HOOD still need to be profitable and thus could not offer dividends even if they wanted to.
Bottom Line
Investors should seriously consider their investment objectives and financial means before deciding how to buy Robinhood (HOOD) shares. At the time of writing, Robinhood is traded at $9.89. This more affordable entry point into Robinhood stock may appeal if you have high hopes for the company’s future growth due to its announced feature releases. Setting specific goals is a sound practice in general. If you want to save money on trading fees, find a reputable, licensed brokerage that doesn’t charge a commission.
Moreover, choose an online broker that gives access to the NASDAQ exchange if you want to invest in HOOD shares, no matter where you are. It is also worthwhile to research various brokers’ policies, services, platforms, costs, and laws. Trading stocks can be done through a number of different channels, including desktop, web-based, and mobile apps. Before putting your money into a risky investment like shares, you should weigh the benefits and drawbacks of such a move.
Q & A
Baiju Bhatt and VladTenev founded Robinhood 2013 in Palo Alto, California.
VladTenev owns Robinhood Markets.
Robinhood’s largest shareholder is Index Ventures SA, holding 8.3%.
A total of 0.897 billion Robinhood Markets shares were outstanding as of the end of the first quarter of 2023.
Its headquarters are in Menlo Park, California.
You can buy Robinhood shares by selecting a stock broker, creating a trading account, depositing funds and buying the amount of Robinhood shares you want.
You can buy Robinhood shares from online trading platforms like eToro, Capital.com, and the Robinhood markets ( If you are an American resident).
Yes, Robinhood shares are available online.
Yes, you can buy fractional Robinhood shares.
As a newly public company, Robinhood does not pay Dividends on its stocks.
Whether Robinhood stocks are a good buy for you will depend on your expectations for the Stock and your overall investment strategy.
You can buy Robinhood shares commission-free from online platforms. However, you may need to pay an overnight fee, currency conversion, and withdrawal fee.
As its stock price has declined since its IPO, the company looks unprofitable. However, If you still think the firm has promising prospects, buying shares at a discount could be a good opportunity.
Robinhood app offers the best Platform to buy shares for American investors. Regardless, you can buy the company’s shares on other platforms like eToro and Capital.com.
Robinhood shares are listed on the NASDAQ Exchange.
You can trade Robinhood shares with Leverage on trading platforms like eToro and Capital.com.
