How to buy Robinhood shares
Robinhood has been a private company since its inception, however, it is now poised to sell shares to the public for the first time. While you can’t buy shares right now, you will be able to soon, and this guide tells you everything to need to know ahead of the big day.
Robinhood is set to become a publicly-traded company this year, and shares will be sold to investors on the NASDAQ stock exchange. The company has chosen to conduct either a traditional IPO (initial public offering) or a direct listing, which is practically the same but with more potential volatility due to the lack of institutional investment in the first few days.
The reason companies conduct an IPO is to raise capital to bankroll growth, and going public can also enhance their reputation and transparency due to sterner regulators and the need to disclose earnings. In return for their investment, shareholders can speculate on the price of the stock and possibly receive a portion of future profits, known as dividends, though this varies by the company.
Once the company is public, anyone can buy shares in Robinhood. This can include large institutions and even the company’s management team, which is a good way to see if the company’s administration is aligned with the interests of shareholders.
When is the IPO?
It is expected to happen in the first half of 2021, though there is currently no fixed date. Moreover, the company’s potential ticker has not been announced yet, though both ROBN and HOOD are available and stand a good chance of being chosen. Make sure you bookmark this page to find out when the date is announced first, which will be updated along with the latest news on our website.
Can I pre-order Robinhood shares?
Only with some brokers. For example, in the United Kingdom, only IG allows investors to take a position in a stock pre-IPO. Make sure you check our reviews to see if your broker offers pre-order services. Otherwise, just make sure you are prepared to buy ahead of Robinhood’s first trading day.
Where can I do this?
You can get involved by signing up with a broker. Make sure you create and fund your account well in advance of the IPO so you are ready to trade from the first possible moment.
Compare the best platforms to invest in Robinhood shares
On the day of the IPO, you can buy shares in Robinhood through any of the brokers below. Our team of investment specialists have been through each of them with a fine-tooth comb to make sure that they offer the lowest fees and most reliable service for you.
How to buy Robinhood shares, a step-by-step guide
Anyone can buy shares in Robinhood, and it can be a great way to make your money work as hard as you do. Below are the 5 steps that you should follow to successfully invest in the company.
- Choose a broker. In order to buy Robinhood stock, you will need to use an online brokerage platform. There are many different options to choose from, each with their own unique benefits and drawbacks. The comparison table above can help you select the right broker for you, and you can head to our comprehensive broker reviews if you’re still unsure.
- Create an account. Once you’ve selected your broker, simply go to their website and create an account. The steps required for this will vary from platform to platform, but generally you can expect to have to provide your name, email address, phone number, and some form of photo identification.
- Deposit funds. Log into your broker account and select the option to deposit funds. Depending on your broker you’ll have a variety of payment options available; most brokers accept bank transfers and debit card payments, but not all accept e-wallets such as PayPal. Select your preferred payment method and deposit the amount of money you wish to invest in Robinhood shares.
- Place an order for ROBN stock. Now navigate to the broker’s buying stocks page (a link to this can be found in the menu on the website). Here you’ll be able to search for Robinhood’s ticker symbol (ROBN) and see the current price at which the stock is trading. If you’re happy with the price, enter the amount of shares you wish to buy and place your order.
- Execute your order. Once you have placed your order, your broker will automatically execute it for you and your Robinhood shares will be listed in your account. Congratulations, you’ve just bought shares in Robinhood!
What is Robinhood? And should I invest?
Robinhood is an American financial services company that is headquartered in California. Founded in April 2013 by Vladimir Tenev and Baiju Bhatt, it has become one of the most popular places to invest in a diverse range of things, such as stocks, exchange-traded funds (ETFs), options, gold, and cryptocurrencies.
The company’s big advantage is its commission free model. Before Robinhood came along, investors would commonly have to pay between $5 and $10 in fees per trade, and many also needed to invest a minimum of $500 to open an account. Robinhood has turned this archetype on its head, making investing much more accessible.
Whether you want to invest in Robinhood is up to you. For brokers, going public is a well-trodden path, as is evidenced by the largest stock broker in the United States, Charles Schwab. Many feel this listing is Robinhood’s gateway to significant growth, as the capital it raises will be used to capitalise on a strong year of order-flow revenue totalling $682 million, a 514 percent increase year-on-year.
Investing in the infancy of a company’s public existence can carry additional risks as the market finds a price it is happy with, but due to the company’s rapid recent growth, it is a less risky choice than many other IPO stocks.
How has Robinhood performed in recent years?
The company’s success is obvious. Having started with just half a million users in 2015, Robinhood now has over 13 million, and its valuation has grown in a similar, rapid fashion, up from $1.3 billion in 2017 to over $20 billion by March 2021.
2021 has been so strong for Robinhood because a whole nation of ordinary people have been sitting at home during the COVID-19 pandemic and have received stimulus cheques. Many have used these funds to take up investing, resulting in much of the volatility seen at the start of 2021.
Robinhood controversially suspended the trading of several stocks in early 2021. This was prompted by a surge in the trading of GameStop and other shares by the WallStreetBets subreddit. After some short-term reputational damage, the platform appears to have steadied the ship before moving forwards with its IPO.
Is it a good time to buy Robinhood shares now?
You can’t buy Robinhood shares right now; you need to wait until the IPO or direct listing. There are some risks you need to take into account too. When stocks go on their maiden voyage onto the public market, there can be plenty of volatility as the market tests the water, and this is especially true of well-known companies. In short, expect the unexpected.
If you believe Robinhood will grow in the long term, make sure you conduct due diligence and really drill into the company’s business model before giving it any of your hard-earned capital. Whilst investing in Robinhood could lead to substantial gains, it can also lead to losses, so never invest money you can’t afford to lose.
As previously mentioned, the investment thematic has gathered pace since COVID-19 came to the party, but will this trend continue once lockdowns cease and retail investors have to go back to work? Will they still have time to invest or trade? This remains to be seen and is an important consideration ahead of Robinhood’s listing. For the latest news to help you make good decisions, check out our analysis:
Should I buy Cisco shares after Wolfe Research raised its price target to $63?
Delta Airlines shares remain under pressure after weaker than expected Q1 results
JPMorgan shares remain in a bull market supported by Q1 results
Buying, selling and trading Robinhood shares for beginners
What to do before buying shares
You should always take the time to research a stock fully before investing your money, especially if you haven’t bought shares before. The more knowledge you have, the better your chances of making a wise investment.
With that in mind, here’s a checklist to run through before investing in Robinhood shares.
- Research the company. You should always examine the fundamentals of a company before buying its stock. What is Robinhood? How did the company get its start? How did it grow? Is Robinhood’s revenue and profit growth picking up? Is the company innovating? The more you know about Robinhood, the better positioned you’ll be to make smart investment decisions.
- Make sure you understand the basics of stock investing. Before getting involved in the stock market, make sure you have an understanding of how it works. This will ensure that you have more clearly defined goals and have thought through how you will achieve them.
- Decide between share dealing and CFD trading. Choose the type of investment strategy you want to pursue, and make sure you have carried out the necessary fundamental or technical analysis for share dealing and CFD trading respectively.
- Set the size of your budget. The golden rule of investing is never to risk more than you can afford to lose. Not every investment you make will result in a profit, so it is important to set a budget that not only allows good potential for capital growth, but also protects against overly damaging losses.
- Find the right broker. Individual brokers each have their own pros and cons. Some will have low fees but have a user interface you struggle to understand, whereas others may be a bit more expensive but come with a range of features that you want to take advantage of. Our broker reviews can help you find the right platform for you.
- Examine broader market conditions. No stock exists in a vacuum, and it’s always important to analyse the general trends of the stock market as a whole before investing. If a bear market is setting in and stock prices are falling, it’s best to wait it out and invest your money later when the stock is cheaper. If, however, the market is looking bearish, you’ll want to make your investment quickly to get the maximum benefit from rising stock prices. Our news section can help you keep on top of movements in the financial markets.
What is the difference between buying, selling, and trading shares?
If you’re new to stock investing, then it’s important to understand the basics of how to buy, sell, and trade Robinhood shares. Here’s a quick run-through of what’s involved in each.
Buying Robinhood shares
This process involves finding a broker and placing an order to buy Robinhood stock, as outlined in the steps further up this page. Ideally you want to time your investment when the stock’s price is low so that you can profit by selling the shares after they increase in value.
Selling Robinhood shares
When you sell any Robinhood shares you have bought, you’ll want to do so at a higher price than the one at which you bought to earn a profit.
When you sell is up to you. You might decide to hold for a long period of time, hoping to benefit from the company growing steadily throughout. Or, if you see that Robinhood’s stock is already up a lot compared to the price you bought it and you’ve noticed that the stock market is starting to fall, it might make sense to sell and take your profits to invest elsewhere. Equally, if the stock has fallen since you bought it and looks set to fall further, it might be a good idea to cut your losses by selling your shares.
Trading Robinhood shares
Trading is the same process as buying and selling shares, it’s just done over shorter periods of time with the aim to make small profits on a regular basis. This means that you can make money faster and spend your profits in your day-to-day life – however, on the other side it means you can lose money faster as well. For inexperienced investors, we generally recommend making investments for at least 6 months to a year instead of making trades in quick succession.
You can trade Robinhood shares through buying and selling shares, or by trading with CFDs. These allow investors to speculate on stock prices and trade with leverage in pursuit of bigger gains. CFDs trading is explained further in the next section, but it is worth noting that beginners should avoid trading with leverage. It comes with large risks and is best left to experienced investors.
Ways to buy Robinhood shares: share dealing and CFD trading
When it comes to investing in any stock, the two options you have are share dealing and trading. Which one of these methods to opt for largely depends on your investment timeline, with investors thinking long term tending to go for share dealing, and those looking for short term gains pursuing a more aggressive trading strategy.
Here’s a quick summary of the two approaches, and the pros and cons of each.
Share dealing refers to the practice of buying and holding shares in a particular company over the long term. When investing like this, you’re seeking to profit either from dividend payments or an increase in the stock’s price over time.
When investing your money this way, it is important to do thorough fundamental analysis of the company in which you are investing. You want to put your money in a stock you believe will trend upwards over time, even if there is some market volatility along the way, rather than get distracted by shorter term peaks and troughs.
- Can build wealth over time to achieve financial goals
- Don’t need to be very reactive to short-term market movements
- Some stocks will give you an income through regular dividend payments
- Takes a long time to realise any profits
- Your capital is tied up in stocks and cannot be used for other investments
If your aim is to generate profits in the short term, then you might be better off trading shares than holding them in your portfolio. Stock trades like this are executed using CFDs (contracts for difference), which allow investors to trade against the value of a stock without having to take ownership of it. When CFD trading, investors are looking to buy and sell stocks fast to profit from short-term fluctuations in value.
One aspect of CFD trading that many investors find attractive is that they allow you to trade with leverage. This means you can place large trades while only putting up a fraction of the value yourself – for instance, if a platform offered leverage of 1:10, you could put £10 into ROBN shares and be able to trade £100 worth. This can maximise profits if the market moves in your favour, but be careful as it can also lead to heavy losses.
When trading using CFDs, it is key to be skilled at technical analysis and reading stock price charts. As you’re trading stocks quickly and frequently, the fundamental strength of the company in which you’re investing isn’t as important as being able to predict how its stock price will rise and fall minute-by-minute.
- Can generate fast profits if you read the market right
- Some platforms allow you to trade with leverage
- Prevents your capital being tied up so you can take advantage of investment opportunities
- Trading with leverage is risky and can lead to big losses
- Doesn’t necessarily generate growth over the long term
Consider which approach suits you best and craft an investment strategy that works for you. If you need more information, then simply take our stock trading course and read our guide to CFD trading to get you up to speed.
If neither of these options appeal to you, then you can find a variety of other ways to invest in ROBN stock on this page. If, however, you’re ready to buy Robinhood shares now, simply select one of the brokers in the table above and get started.
How to choose a broker
With the wide variety of online brokers available these days, it can be hard to figure out which is the best service to go with. Our comparison table and in-depth reviews can help you cut through the noise, but by and large these are the aspects you should be considering when selecting a broker:
- Range of stocks available. The most important thing is that you can actually use the broker to buy the shares you’re looking for. Some brokers offer more stocks than others, and many will allow you to trade other assets, such as forex and commodities.
- Fees and commissions. You want to keep as large a chunk of your profits as you can, so it’s important to make sure your broker doesn’t charge high fees that can eat into your profits.
- Regulation. You should only use regulated brokers to place trades and buy shares. Unregulated brokers can be risky and offer little to no protection if the business were to fail while you had funds in your account.
- Payment methods available. You might want to buy Robinhood shares using a specific payment method, such as PayPal. Not all brokers accept every payment method, but using our comparisons you can search only the brokers that support the option you’re looking for.
- Reputation. One of the strongest indicators of a broker’s reliability is the reputation it has with the customers who have used it. Brokers are online businesses, and as such many user experiences can be found online. You can check these out in addition to our reviews to make sure you choose the right platform.
- Customer service. As you’re going to be investing your money using the platform, you want to check that the broker offers good customer service in case you have a query or something goes wrong.
Latest Robinhood news
DAX index advanced to its record highs on Friday. Here are the next targets
Chainlink (LINK) price analysis for April
April update: should you buy or sell Compound (COMP)?
CNBC ‘Halftime Report’ Crew talk Bumble, Altimeter, Plug Power, and more
Bitwise CIO discusses prospects of a bitcoin ETF
PNC Financial reports a 3% annualised decline in its first-quarter revenue
Stock trading courses
Long-term Stock Investing
Short-term Stock Trading
- 1. How to buy Robinhood shares
- 2. Robinhood IPO
- 3. Compare the best platforms to invest in Robinhood shares
- 4. How to buy Robinhood shares, a step-by-step guide
- 5. What is Robinhood? And should I invest?
- 6. Buying, selling and trading Robinhood shares for beginners
- 7. Ways to buy Robinhood shares: share dealing and CFD trading
- 8. How to choose a broker