Robinhood (NASDAQ: HOOD), the online brokerage that popularized commission-free trades among retail investors, is often associated with meme stocks and the GameStop frenzy that occurred earlier this year. But the platform has also made it easier for novice investors to get started in the stock market. With its user-friendly interface and lack of trading fees, Robinhood has attracted millions of users who want to invest their money without breaking the bank.
In this article, we will take a look at the 11 best stocks to buy on Robinhood for beginners. To see more such companies, go directly to 5. These stocks have been selected based on their popularity among Robinhood users and their potential for growth. But before we dive into the specifics, let's take a closer look at Robinhood and how it works.
As the name suggests, Robinhood is on a mission to democratize investing. Robinhood began the commission-free trading revolution that has since been adopted by many other online brokers. The platform allows users to buy and sell stocks, ETFs, options, and cryptocurrencies without paying any fees. This has made it easier for small investors to get started and has opened up the stock market to a wider audience.
For some users, Robinhood could be a good platform for investing—but there are reasons to be wary of any platform that treats markets almost like a game. One of the biggest concerns is that novice investors may not fully understand the risks involved in investing and may make poor decisions based on hype or market trends. Additionally, Robinhood has come under fire in the past for its lack of transparency and its reliance on payment for order flow.
Payment for order flow is a practice in which brokers sell their clients' orders to high-frequency trading firms, who then execute the trades at a slightly better price. This allows Robinhood to offer commission-free trades, but it also means that users may not be getting the best price for their trades. This analysis will go back to the drawing board to understand and discuss how Robinhood makes money with commission-free trades.
Despite these concerns, Robinhood has become one of the most popular investment apps in the world. The platform has over 22 million users and has helped to create a new generation of investors. Many of these investors are millennials who may not have had access to traditional investment options in the past.
If you used the investing app Robinhood, you could qualify for part of a $20 million class action settlement resolving allegations that the company misled customers about how it made money. The settlement was reached in December 2021 and covers customers who used the platform between 2015 and 2021.
So, which stocks are the most popular among Robinhood users? According to data from Robintrack, a website that tracks the most popular stocks on the platform, the top stocks include Apple (AAPL), Tesla (TSLA), Amazon (AMZN), Microsoft (MSFT), and Facebook (FB). These are all well-known companies with a proven track record of success, and many investors see them as a safe bet.
But there are also some lesser-known companies that are popular on Robinhood. These include Palantir Technologies (PLTR), Moderna (MRNA), Coinbase Global (COIN), and Sundial Growers (SNDL). These companies are riskier than the more established names, but they also have the potential for higher returns.
Bottom line: Robinhood is best for DIY traders in search of things like low fees, market research, flexible investment choices, and a user-friendly interface. However, it's important to remember that investing always comes with risks, and novice investors should take the time to educate themselves before making any decisions. Robinhood offers a great starting point for investors, but it's up to each individual to do their own research and make informed choices.
