With delivery delays widespread throughout the U.S. and coronavirus cases surging, keeping shoppers away from retail stores, you might find it difficult to find a last-minute gift.
Public.com thinks it has a solution. The social platform built on top of a brokerage app is allowing current members to gift new members fractional stock for free. The user giving the gift does not pay. Instead, a random amount of value up to $100 — in the form of a specific stock the member chooses — is assigned to the gift. The average amount gifted tends to be $15, according to Public's vice president of marketing Katie Perry,
The promotion for current users through year-end is a way to encourage more people to join the platform. According to Perry, gifting a fractional share helps bring down the barriers to investing, "There's a psychological barrier to investing. Allowing users to gift shares, we are creating a personal connection that makes investing more accessible."
While there are stocks that trade at $15 or less per share, many of the stocks popular with younger investors trade at much higher per-share values.
Perry herself recently invited a friend to join the platform by gifting her shares of Peloton, whose current stock price is well around $140. "We want our users to be engaged with their portfolio, engaged with their selected companies and engaged with the community."
The platform has also drawn the attention of high-profile investors, including actor Will Smith, Houston Texans Pro-Bowler J.J. Watt and skateboarding legend Tony Hawk. The platform recently raised $65 million in Series C funding, bringing its funding total to $90 million.
Public.com allows users to buy and sell stocks as well as ETFs from Vanguard and BlackRock without commissions.
Public.com is a brokerage firm, but also stresses its goal of being an investing social network that prioritizes financial literacy among its users. The company prohibits day trading and also has features like safety labels that highlight risks. When Hertz, the automobile rental firm, earlier this year filed bankruptcy, the stock surged as retail investors poured money into. Public prevented users from trading the stock.
"Ninety percent of investors are new investors, therefore, we feel a much bigger responsibility to ensure people know what they are getting themselves into," Jannick Malling the co-founder and co-CEO of Public, explained to CNBC.
Perry says that the sort of information exchanged on the platform can vary from everything to breaking down an S1 — that is an IPO filing document with the Securities and Exchange Commission detailing a company's financials before they go public — to the basics of dollar-cost averaging.
Because the social network is built on a brokerage app, every user is verified. The app also includes prompts, instructing users what conversations are appropriate for the community. "People learn through sharing ideas. Because we are a brokerage app we cannot give advice. It's all on the community," said Perry.
Public.com is not the only stock gift option this holiday season.
You can also gift stock using Stockpile. With a Stockpile gift card or e-gift card you can give between $1 and $2,000 to buy shares, or fractional shares, of a stock. Your recipient can then redeem the gift card and create an account with Stockpile.
Stockpile also offers custodial accounts, which allows guardians to monitor minors' investments.
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According to James Royal, author of The Zen of Thrift Conversions and a Bankrate analyst, Stockpile is one option, but you can also give stock via brokerage accounts. Royal recommends using brokerage accounts for anyone that wants to set up recurring fund transfers.
If the recipient has the same brokerage firm as the sender, the process is as simple as transferring shares electronically. However, if the recipient is outside of the sender's brokerage firm, Royal says it will take more time to get the gift set up. "You'll need information like their Social Security number, account number, and name. Obviously, this is all very sensitive information and needs to be handled with care. You can't surprise someone with this sort of gift," he said.
If you wish to give investment wealth to a child, Royal suggests a 529 savings plan. "With a 529 anyone can contribute. They'll be investing in that child's education."
529 plans allow parents to save after-tax dollars for education expenses. The savings grow tax-free as long as they are ultimately used for qualified education expenses.
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Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.