October 24, 2023

How to Buy Robinhood Stock

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Looking to buy Robinhood stock and learn about all its benefits and risks? Here's all you need to know.

Robinhood has faced a few challenges in the past. However, the platform continues to grow and now has over 20 million active users.

Read on to learn how to buy Robinhood stock and see whether or not it aligns with your goals.

Disclaimer: CreditDonkey does not advise you to invest in any particular company. This article merely provides guidance on how you can invest in Robinhood.

Is Robinhood on the Stock Market?

Yes, Robinhood is on the stock market. It's listed on the NASDAQ stock exchange under the ticker symbol 'HOOD'.

Robinhood's initial public offering (IPO) took place on July 29, 2021. The price was set at $38 per share, raising $2 billion at its closing. But it closed on its first day of trading at $34.82—a decline of 8%.[1]

In 2023, the company reported its first profitable quarter since its IPO.

Can you buy Robinhood stock on Robinhood?
Yes, you can buy Robinhood stock (HOOD) on the Robinhood platform. Just search for the HOOD ticker symbol on the platform and input how many share you want to buy.

How to Buy Robinhood Stock

You can buy Robinhood stock using any brokerage or trading app. There are no special qualifications needed.

How would you rate your understanding of how to buy stocks like Robinhood, esp through its own app?

Create an Account with a Brokerage

Before you start investing in Robinhood, you'll need to create an account with a brokerage firm or trading app. Visit your preferred brokerage's website/app and follow their instructions to create an account.

Typically, you'll need to provide:

  • Your name
  • Social Security number
  • Address, phone number, and email
  • Date of birth

You may also need to provide a copy of your driver's license or passport to verify your identification.

There are several different account types you can open (note that not all brokerages support every account type):
  • Taxable: A general-purpose investment account
  • Joint: An account shared between two individuals
  • Retirement (includes Traditional and Roth IRA)
  • 529 College Savings
  • Custodial: An account set up for a minor

Don't have a ton of money to invest? Look for a brokerage that supports fractional shares. This means buying a portion of the share instead of the whole thing. This lets you invest in Robinhood with as little as $10.

Keep reading for our top recommended brokers to buy Robinhood stock.

Can I buy $1 of stock on Robinhood?
Yes. With fractional shares, you can buy a portion of a stock instead of the whole thing with as little as $1. On Robinhood, companies that have stocks worth over $1 and have a market cap of over $25 million are eligible for fractional shares.

Fund Your Account

Once you create your account, you'll need to fund it to start trading. Typically, you can do this by linking your bank and transferring money. Depending on the brokerage, you may also need to deposit a minimum account.

Before making any investments, be sure to read through the terms and conditions of the platform.

Now, you can start investing in Robinhood stock.

Once you've got money in your account, you should be good to go. To start, search for Robinhood stock using their ticker symbol: "HOOD."

Robinhood should appear along with other relevant data like current stock price and daily average volume.

For more detailed information like news updates and analyst ratings, click on the company listing.

Make sure to do research on the company and consider all the risks before investing. This will help you understand the company's financial health, its growth potential, and possible risks.

Decide How Much You Want to Buy

Your next step is to decide how much stock you want to buy. Most platforms will let you enter how many shares or the exact dollar amount you want to buy.

For example, if the investing app allows for fractional shares, you can say that you want to buy $50 worth of Robinhood instead of full shares.

After entering the details, you are now ready to place your order.

How many shares of stock should I buy?
The number of shares you should buy will depend on how much money you have to invest, how much you need to diversify your portfolio, and whether or not your broker allows buying fractional shares.

Place Your Order

After entering all the information, take a minute to review everything one last time. When you're ready, place your order to complete your purchase.

Note that it may take a few minutes to process your order, but you'll receive a confirmation once it goes through.

There are two types of orders you can execute to place your trade:
  • Market order: Execute the transaction now at the current market price.
  • Limit order: Set a specific price at which you wish to buy. This gives investors more control. But if the stock never hits your price, the trade will never be executed.

After that, you can view your holdings in your account portfolio and track their performance over time.

Best Brokerages to Invest in Robinhood

Here are some of our top recommended brokerages to buy Robinhood shares. All these brokerages have no trading commissions.

Robinhood
Robinhood is one of the most popular investment apps for beginners. It has no minimum to get started and also supports fractional shares, allowing you to invest in stocks with as little as just $1.

M1 Finance
M1 Finance is a unique hybrid self-directed brokerage and automated investing. You choose your own stocks and build your own portfolio. M1 will then automate your strategy. It also supports fractional shares. The minimum to start is $100.

Stash Invest
Stash Invest is designed for new investors who need a little handholding. It helps you pick stocks aligned with your goals and risk tolerance, but you can also choose your own stocks. You can also purchase fractional shares. There is a monthly fee starting at $3/mo.

Webull
Webull also has no trading fees or minimum investment. It offers better research tools and analytics for more experienced investors. It's also a good choice for active traders with free extended trading hours. Webull offers fractional shares for as little as $5.

Fidelity
Fidelity is a great choice if you're looking for a full-service brokerage with a wide variety of account types and other investment products. There is no account minimum. Fidelity also offers fractional shares from as little as $1.

Pros and Cons of Buying Robinhood Stock

Pros:

  • Popular brand among young investors
  • Millions of users

Cons:

  • Risky business model
  • Volatile stock price
  • History of regulatory and privacy issues

Why Invest in Robinhood?

In 2023, the company reported its first profitable quarter since its IPO, with strong revenue growth from its crypto trading platform and expanding user base.

The company is also planning to launch brokerage services in the UK in 2023. This would give it access to a new pool of investors.

These developments are indicative of Robinhood's growth potential and its commitment to providing innovative financial products and services to its users.

Robinhood 2023 Revenue Summary[2]
  • Total net revenues: $486 million (10% increase sequentially)
  • Transaction-based revenues: $193 million (7% decrease sequentially)
  • Options: $127 million (5% decrease)
  • Cryptocurrencies: $31 million (18% decrease)
  • Equities: $25 million (7% decrease)
  • Net interest revenue: $234 million (13% increase sequentially)

What is your main motivation for considering buying Robinhood stock?

What is Robinhood's Valuation?

Robinhood has a market cap of $8.29 billion with a price-to-earnings ratio of -9.81 for October 2023.[3][4]

Investors usually look at two key factors when checking the value of stock:

  1. Price-to-Earning Ratio (P/E Ratio)
    The P/E ratio is a way to measure how much investors are willing to pay for a company's stock based on its earnings.

    Robinhood's negative P/E ratio could mean two things: the company is losing money (they haven't turned a profit until 2023), or the market is undervaluing it (rising user base and popularity).

  2. Market capitalization
    Market cap is a measure of how much a company is worth based on the current price of its shares.

    Robinhood's current valuation means that if the company were to be sold today, it would be worth $10.4 billion. This is down from its peak valuation of $20 billion in 2021.

    A few reasons for the decline include the drop in active users, the meme stock trading frenzy, and some controversy surrounding the company's trading practices.

    Despite the decline in its valuation, Robinhood is still a valuable company. It has a large user base, a strong brand, and a unique business model.

No single metric can tell you everything you need to know about a stock's value. To get the bigger picture, consider a stock's P/E ratio, market cap, and more.

Here are some factors to consider before investing in Robinhood stock:

  1. Your investment goals
    What are you hoping to achieve by investing in Robinhood stock? Are you looking for short-term profits or passive income, or are you looking to invest for the long term?

  2. Your risk tolerance
    How much risk are you comfortable with? Robinhood could be seen as a risky investment since the company is still losing money and has a history of regulatory scrutiny.

  3. The company's financial performance
    Robinhood is not yet profitable and it has a history of negative earnings. Investors should carefully consider the company's financial performance before investing.

  4. The company's competitive landscape
    Robinhood is facing increased competition from other online brokerages, such as Charles Schwab and Fidelity. Investors should consider how Robinhood will compete in the future.

Having second thoughts about Robinhood stock? Or maybe you're looking to further diversify your portfolio? Here are a few other publicly traded trading platforms you could take a look at.

What concerns you most about investing in Robinhood stock?

Alternatives to Robinhood Stock

You can also consider investing in the following trading platforms.

  1. Charles Schwab Corporation (SCHW)
    Schwab is a leading financial services company with a long and successful track record. The company offers a wide range of investment products and services, including commission-free trading, research tools, and educational resources.

    Schwab is also a leader in the retirement savings market, with over $8.02 trillion in assets under management.[5]

  2. Fidelity National Financial, Inc. (FNF)
    Fidelity is a well-established and respected financial services company with a long history of providing quality investment products and services.

    It is one of the largest investment management companies in the world, with over $4.4 billion in assets under management.[6]

Bottom Line

Whether Robinhood stock is right depends on your investment goals and risk tolerance.

Robinhood could be a good option if you're looking for a long-term investment in a company with strong growth potential.

However, if you're uncomfortable with the risk of investing in a company that's still losing money, you may want to consider other options.

Ultimately, deciding whether to invest in Robinhood stock is up to you. Just make sure you do your own research and understand the risks before investing.

References

  1. ^ Yahoo Finance. Robinhood shares close 8% lower in first day of trading, to $34.82, Retrieved 10/13/2023
  2. ^ Robinhood. Robinhood Reports Second Quarter 2023 Results, Retrieved 10/13/2023
  3. ^ Nasdaq. Robinhood Markets, Inc. Class A Common Stock (HOOD), Retrieved 10/13/2023
  4. ^ public.com. Robinhood (HOOD), Retrieved 10/13/2023
  5. ^ Charles Schwab. News Release: Schwab Reports Second Quarter Results, Retrieved 09/05/2023
  6. ^ Fidelity. Fidelity by the Numbers: Asset Management, Retrieved 09/05/2024

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