How to Buy AFC Gamma Inc. (AFCG) IPO Stock

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Contributor, Benzinga
Updated: May 21, 2021

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AFC Gamma Inc. (NASDAQ: AFCG), a newly formed financial services company, focuses on the commercial real estate space for cannabis companies. Founded on July 6, 2020, AFC Gamma provides loans to companies operating in jurisdictions throughout the United States where cannabis has become legalized. AFC Gamma Inc. became one of the few cannabis real estate investment trusts (REITs) listed in the United States.

Let Benzinga guide your investment in AFCG. We’ll take you through the process.

How to Buy AFC Gamma Inc. (AFCG) Stock Summary

Your basic process to buy shares of AFCG looks the same as buying any other stock. Complete these 3 primary steps to purchase AFCG:

  • Select a brokerage: Before you can even think about buying shares of AFCG stock, you need to open up your own brokerage account. Define your trading goals so you can choose between the numerous brokerage services out there.
  • Deposit funds: Once you choose a broker, you need to put money in your account to trade. If your broker offers instant deposit services, simply hit “deposit” and your funds will immediately appear for your use.
  • Locate shares of AFCG and buy: AFCG trades on the NASDAQ. You should have no issues finding shares to buy. Since this is a recent IPO, consider using limit orders so you can buy at a set price or better.

How to Buy AFC Gamma Inc. (AFCG) Stock

Since the start of 2021, cannabis stocks have heated up the stock market. Many stocks have doubled or tripled in price. Despite the recent cannabis buzz, many cannabis companies based in the United States still find it difficult to access capital due to federal law. This is where AFC Gamma Inc. (AFCG) comes in.

As one of the few cannabis REITs on the market, AFCG seems poised to leverage its institutional connections as a major financier of U.S.-based cannabis companies. While cannabis laws in the United States still lag behind many other countries, this could change. However, you can't point to any specific guarantees within newly or partially legalized markets — the cannabis sector included.

Step-by-step Guide:

  1. Pick a brokerage.

    Your starting point as a future investor in AFCG starts with your own brokerage account. Since most brokers have moved to commission-free trading, you can purchase your shares of AFCG fee-free.

    Think about your goals as an investor and select a broker that fits your needs. As a new trader, you may want to choose a brokerage that offers paper trading so you can practice without risking real money.

    Most brokers offer some sort of bonus when you sign up, especially if a friend invites you to trade with that company. Keep these factors in mind before you finalize your application. 

  2. Decide how many shares you want.

    Once you open your account, you now must decide how many shares of AFCG you want to buy. Consider your risk tolerance and your financial situation when you make your decision.

    Investing more than a few percentage points of your account into a single stock is very risky, especially in a recent IPO affiliated with the cannabis sector. Limit how many shares you buy and decide beforehand when you will take profits or losses.

  3. Choose your order type.

    Now that you know how many shares of AFCG you want to purchase, select how you will buy those shares. Multiple order types offer everything from speed to efficiency.

    If you use a market order to buy shares, your order will fill at the current market price. If you settle on a limit order, then your order won’t get filled until your preset price point gets triggered. 

    Limit orders allow you to control your trade more, so you might want to use a limit order when trading a recent IPO in a volatile sector like AFCG. Using a market order could mean your order gets filled at an unfavorable price.

  4. Execute your trade. 

    Now that you have thought through all of these considerations, execute your trade. Simply hit “buy” and sit back and relax as your broker processes and attempts to fill your order. Shares of AFCG should then appear in your brokerage account.

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AFCG Stock History

AFC Gamma Inc. (AFCG), based out of West Palm Beach, Florida, was founded in July of 2020. AFCG helps U.S.-based cannabis companies obtain financing. AFC Gamma is a brand new company but its CEO and other key executives have experience in the real estate investment space. AFCG filed to go public at the end of 2020 and should raise $100 million during its February 17 IPO.

Pros to Buying AFCG Stock

Recent IPOs and stocks in the cannabis space show extreme volatility but an investment in AFC Gamma Inc. could:

  • Further cannabis legalization: As more and more jurisdictions in the United States legalize cannabis, this could provide a catalyst for AFCG. Multiple states in the south (such as Alabama) could legalize medical cannabis this year, which provides a great nearby opportunity for AFCG.
  • Growth in the cannabis sector overall: Since the start of 2021, almost every cannabis stock listed in the United States has jumped. Tilray Inc. (TLRY), a Canada-based cannabis company, grew from under $9 to start the year to over $65 by February 10. Furthermore, another U.S. cannabis REIT called Innovative Industrial Properties Inc. (IIPR) has increased from $20 per share in its November 2017 IPO to a current price of over $200! If this momentum continues, AFCG could show big gains.

Cons to Buying AFCG Stock

While the cannabis sector has been on fire since the new year, it comes with added risks. Investing in a REIT further complicates the situation, so pay attention to:

  • Legalization issues: Since cannabis is still a Schedule I substance in the United States, investors always need to keep abreast of any legalization changes. A reversal of legalization trends would not bode well for AFCG but rapid legalization could also pose a challenge. If financial hurdles that U.S.-based cannabis companies face when getting loans disappear, AFCG could see themselves competing with bigger players in the financial space. 
  • Trend reversals: You can’t predict the markets. Other cannabis stocks have made massive price increases but a pullback could loom. If the whole cannabis sector experiences a correction following the IPO of AFC Gamma Inc. (AFCG), this stock could drastically decrease in value.

Consider Investing in a Hot Sector

Two hot market trends: cannabis stocks and IPOs. AFC Gamma Inc. (AFCG) will capitalize on both of these with its IPO on February 17. The price of AFCG will likely follow suit.

AFC Gamma Inc. provides investors with a unique opportunity to invest in the financing of U.S.-based cannabis companies. Since the south has proven slower to legalize cannabis, AFC Gamma’s location in Florida might put it in a perfect spot. As more and more states legalize cannabis, keep a close eye on AFCG. 

Remember not to sink a large percentage of your account’s balance into one investment. Only risk money on AFCG that you can afford to lose.