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Independently Financed

The Robinhood free stock catch (and an easy workaround)

June 19, 2017 by indyfinance 32 Comments

I don’t think you should invest in individual stocks, but gambling is, famously, fun, and when I want to gamble on individual stocks I use the Robinhood iPhone app, which offers commission-free trades for stocks and ETF’s listed on US exchanges. If you were so inclined, you could even use it as your primary taxable brokerage account, although I don’t believe you can link it to services like Mint or to roboadvisors that would help you periodically rebalance your portfolio.

A little while ago they launched a referral program which gives new users and the existing user who referred them a free share of one of a few stocks. The exact stock you receive is determined randomly among the stocks they offer, which seem to currently include Facebook, Apple, or Microsoft (expensive) and Ford, Sprint, or Freeport-McMoRan (cheap). Apparently the stocks available change periodically based on share price and market capitalization.

If you aren’t a user, feel free to use my referral link: http://share.robinhood.com/stephes23.

Free stocks “lock up” your account’s withdrawable cash

According to the terms and conditions of the free stock referral offer, “[t]he cash value of the stock bonus may not be withdrawn for 30 days after the bonus is claimed.”

That seems reasonable enough, since the point of the referral bonus is to get you onto the platform and trading. They want you to leave the value of your free stock on the platform for 30 days, whether you hold onto the stock or sell it and buy something else.

However, they’ve implemented this restriction in a particularly sneaky way. As the terms and conditions go on to say:

“You have to keep the cash value of the stock in your account for at least 30 days before withdrawing it. After the 30-day window, there are no restrictions on the money.

  • “If we add 1 share worth $10 to your account, you cannot withdraw the $10 you receive by selling the stock for 30 days.
  • “If we add 1 share worth $10 to your account and you deposit $100 dollars into your account, you can only withdraw $90 until you sell the stock bonus. After you sell the share, you will be able to withdraw an additional $10″ [emphasis mine].

Read that second bullet carefully: it says that as long as you hold your free stock, up to 30 days, you can’t withdraw money added to the platform from your own bank account.

I’ve referred a couple of people to Robinhood, and just ran into this exact situation. I received one share each of SPLS (Staples) and VER, a real estate investment trust. I had previously made a few profitable bets on China, which I was ready to sell. To my surprise, when the trade settled, my withdrawable cash was $8.96 lower than the proceeds from the sale. I couldn’t for the life of me figure out what had happened, until I started scrolling back through the “history” tab and spotted precisely that figure: it was the value of a share of Staples on the day I claimed my free share (I had received my VER share more than 30 days ago).

The amounts involved in my case are very small, but you can imagine if you lucked into a share of Apple or Facebook that having a few hundred dollars of your own money tied up could be a real nuisance if you were counting on withdrawing it as soon as a trade settled and the cash became available.

I don’t like this restriction but it’s easy to work around

I had been holding on to my two free shares as a kind of laugh, since they didn’t cost me anything, so I was disappointed to see that I had been punished for doing so. To withdraw the $8.96 of my own money, I would have to sell my share of Staples (now worth $8.84). Then I could reinvest the $8.84 or wait a few more weeks to withdraw it. That’s a weird hassle for a platform that I’ve praised in the past for its simplicity and ease of use.

The workaround is simple: if you plan on using Robinhood to actually gamble or invest, simply sell your free shares as soon as possible, two days after receiving them. That will tie up your own cash deposits for the shortest possible time.

Filed Under: investing

Reader Interactions

Comments

  1. marc says

    February 12, 2018 at 11:06 pm

    Join Robinhood and we’ll both get a stock like Apple, Ford, or Sprint for free. Make sure you use my link. https://share.robinhood.com/sarahc450

    Reply
    • Molly says

      January 6, 2021 at 10:42 am

      Join Robinhood with my link and we’ll both get a free stock https://join.robinhood.com/mollyd-1ce190c

      Reply
    • David says

      January 17, 2021 at 11:43 am

      Join Robinhood with my link and we’ll both get a free stock 🤝 https://join.robinhood.com/davidm3966

      Reply
  2. Bryson says

    April 9, 2018 at 6:06 pm

    Join with my link here! We can both get up $150 worth of stock http://share.robinhood.com/brysonn2

    Reply
  3. Sam says

    May 22, 2018 at 12:28 am

    Join Robinhood and we’ll both get a stock like Apple, Ford, or Sprint for free. Make sure you use my link. https://share.robinhood.com/siams2

    Reply
  4. JB says

    June 19, 2018 at 4:23 am

    dumbest solution i have ever read, Ever,

    Reply
    • Tina Himes says

      May 23, 2019 at 12:56 am

      I agree. That’s not a “way around the problem”…smh.

      Reply
    • Haze says

      December 29, 2019 at 2:51 am

      Agreed that’s why I use this! Literally get my money out in 2 days….share.public.com/haze92

      Reply
  5. MANUEL VARELA says

    December 19, 2018 at 1:54 am

    Join Robinhood and we’ll both get a stock like Apple, Ford, or Sprint for free. Make sure you use my link. https://share.robinhood.com/manuelv296

    Reply
  6. Alyson N Grapes says

    December 31, 2018 at 2:19 pm

    Join Robinhood and we’ll both get a stock like Apple, Ford, or Sprint for free. Make sure you use my link. : https://share.robinhood.com/alysong32

    Reply
  7. Mawli says

    January 11, 2019 at 9:21 pm

    Join Robinhood and we’ll both get a stock like Apple, Ford, or Sprint for free. Make sure you use my link. https://share.robinhood.com/liamm434

    Reply
  8. Robert says

    February 1, 2019 at 7:49 pm

    I’ve been on Robinhood for a month and enjoy it.

    https://share.robinhood.com/robertm7186

    If you use my link above, we each receive a free stock! And, I’m giving you just a bit of advice if you are brand-new to the stock market, like I was.

    My first free stock was Zynga, worth about $4. Knowing nothing about stocks, I just searched on Robinhood and found around a hundred stocks that had a value of under $1, many with values around 15 to 40 cents.

    So, I set a hard limit on how much I would transfer to Robinhood… $20. With my Zynga stock I was already up to $24! I did a bit of youtube watching and some educated guessing and bought a bunch of “penny stocks” -those are the super-cheap stocks.

    I watched them over the first week and learned how to buy and sell using the limit/stop limit/stop loss order types. I gained and lost over the first week, but… I never lost more than $4 total, so my $20 investment was preserved. I had learned and gained a bit!

    So, I gathered up loose change around the house and in my car and took it to the bank… around $39. I transferred that in and then moved up to stocks that were around $3 to $7. Again, I lost some, and gained some due to judgement errors, but I was using “found” money, basically. My goal has been to simply build that amount without putting in more.

    I think if you set a “limit” when you begin as to how much you will put in to your account, then this can be enjoyable and a very low-cost learning experience that may allow you to continue trading and earning small amounts, as I am.

    If this was helpful, please use my referral code! Thanks!

    Reply
    • Josh says

      May 10, 2021 at 7:50 am

      Thanks that gives me a better understanding

      Reply
    • Jenelleflores11@gmail.com says

      May 25, 2021 at 2:09 pm

      Join Robinhood with my link and we’ll both get free stock 🤝 💰https://join.robinhood.com/jenellf9

      Reply
  9. jaref says

    February 9, 2019 at 8:46 am

    Join Robinhood and we’ll both get a stock like Apple, Ford, or Sprint for free. Make sure you use my link. https://share.robinhood.com/jaredb1361

    Can always use my link sure some others are maxed out. Mine just goes for saving and donating later to women’s shelters.

    Reply
  10. Dev says

    February 22, 2019 at 12:07 am

    Use this link to get a free stock: https://share.robinhood.com/devinr343

    Thanks in advance!

    Reply
  11. Will says

    March 13, 2019 at 7:19 pm

    Join Robinhood and we’ll both get a stock like Apple, Ford, or Sprint for free. Make sure you use my link. http://share.robinhood.com/willias734
    Not even close to being maxed out, please use my referral code, will greatly appreciate it. Thank you in advance.

    Reply
  12. Aaron says

    December 17, 2019 at 11:16 am

    You now have a claim to a stock like Apple, Ford, or Facebook. In order to keep this claim to your stock, sign up and join Robinhood using my link. https://join.robinhood.com/aaronb4327
    Have yet to have anyone join with my account so would like to know if this even works. We both get a great free stock! 🙂

    Reply
  13. David says

    February 3, 2020 at 8:44 pm

    Your free stock is waiting for you! Join Robinhood and we’ll both get a stock like Apple, Ford, or Facebook for free. Sign up with my link. https://join.robinhood.com/davidc11746

    Great app for beginners Im up about 70$ on free stocks that I’ve managed to turn into 240$ in a few moths! Thanks for using my link!

    Reply
  14. Jason Hi says

    March 15, 2020 at 9:00 pm

    https//join.robinhood.com/jasonv1445

    Thanks

    Reply
  15. Michelle says

    March 17, 2020 at 2:28 pm

    You now have a claim to a stock like Apple, Ford, or Facebook. In order to keep this claim to your stock, sign up and join Robinhood using my link. https://join.robinhood.com/michelh2519

    Thank you for the advice! I just started and am in college; I figured this would be a good learning experience with my limited funds and ample time thanks to the current pandemic.

    Reply
  16. Court says

    April 30, 2020 at 3:32 am

    Feel free to use my link for a free stock! You now have a claim to a stock like Apple, Ford, or Facebook. In order to keep this claim to your stock, sign up and join Robinhood using my link. https://join.robinhood.com/courtw9

    Reply
  17. idnpoker says

    September 7, 2020 at 4:49 am

    Appreciating the commitment you put into
    your blog and detailed information you present. It’s awesome to come across a blog every once in a while that isn’t the same out of date
    rehashed material. Great read! I’ve bookmarked your site and I’m adding your RSS feeds to
    my Google account.

    Reply
  18. Beetlejuice jones says

    October 2, 2020 at 2:10 pm

    You now have a claim to a stock like Apple, Ford, or Facebook. In order to keep this claim to your stock, sign up and join Robinhood using my link. https://join.robinhood.com/maxuwlb

    Reply
  19. CWDsouza says

    January 12, 2021 at 11:56 pm

    Feel free to use my link for a free stock! You now have a claim to a stock like Apple, Ford, or Facebook. In order to keep this claim to your stock, sign up and join Robinhood using my link.

    join.robinhood.com/chrised-4da409

    Reply
  20. Dave says

    January 17, 2021 at 11:44 am

    Join Robinhood with my link and we’ll both get a free stock 🤝 https://join.robinhood.com/davidm3966

    Reply
  21. Corey says

    March 24, 2021 at 3:34 pm

    Join Robinhood with my link and we’ll both get free stock 🤝 https://join.robinhood.com/robertc8534

    Reply
  22. vj says

    June 10, 2021 at 1:58 am

    new refferal

    https://join.robinhood.com/santhap6/

    get free apple stock

    Reply
  23. Ron M. says

    June 21, 2021 at 10:44 am

    Feel free to use my link for a free stock! You now have a claim to a stock like Apple, Ford, or Facebook. In order to keep this claim to your stock, sign up and join Robinhood using my link.

    https://join.robinhood.com/ronaldm-ec7556

    Reply
  24. Anthony says

    November 10, 2021 at 3:48 am

    I just got Chase at 176.33$… pretty sweet 🙂

    Join Robinhood with my link and we’ll both get a free stock 🤝 https://join.robinhood.com/anthonh-b2abe3

    Reply

Trackbacks

  1. Direct indexing and shareholder democracy - Independently Financed says:
    January 19, 2020 at 9:05 pm

    […] about Robinhood, the fee-free trading app. It’s had some growing pains, both regulatory and technical but it has always fulfilled its essential promise: commission-free buying and selling of stocks and […]

    Reply
  2. link alternatif sabung ayam says:
    January 20, 2020 at 2:33 am

    link alternatif sabung ayam

    The Robinhood free stock catch (and an easy workaround) – Independently Financed

    Reply

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