Amid a market-wide short squeeze, some unexpected winners are pulling ahead of the market. National Beverage Corp. (NASDAQ: FIZZ) is 1 of those winners. Shares of FIZZ have skyrocketed over 83% from January 11, as short sellers battle it out with online forums like Reddit’s infamous “WallStreetBets” subreddit.
If you’re considering investing in FIZZ, it’s a good idea to understand the current market conditions before you take on risk. Our guide for beginners will help you learn more about why FIZZ is surging in value, some of the best brokers you can use to buy FIZZ and the pros and cons of holding this stock.
How to Buy National Beverage Corp. (FIZZ) Stock
The easiest way to begin investing in FIZZ (or any other stock that you’re interested in) is to open an account with a broker. A broker is a financial entity permitted to execute trades on your behalf according to your instructions. Here’s how to get started choosing a broker and using your first brokerage platform.
- Pick a Brokerage
Before you can buy FIZZ, you’ll need to choose where to open a brokerage account.
Every broker operating in the United States allows you to freely trade on the NASDAQ, the exchange where FIZZ is listed. This means that you will have a wide range of brokers to choose from. Some of the factors that you might want to consider when you decide where to open a brokerage account include:
- Trading platform (beginner vs. expert oriented)
- Restrictions placed based on volatility (some brokers like Robinhood have decided to limit retail investors’ access to orders on stocks showing high volatility)
- Commissions and fees
- Access to additional markets (like futures trading and cryptocurrency markets)
- Decide How Many Shares You Want
After your brokerage account is open and funded, you’ll need to decide how many shares of FIZZ you want to buy. Take a look at the current market price of FIZZ before deciding how many shares you can afford. During periods of high volatility, you’ll want to use a limit order to place your purchase to ensure that you don’t lose control of the amount you’re spending. Never invest more money than you can afford to lose, especially when trading highly volatile stocks.
- Choose Your Order Type
When you’re ready to buy, you’ll place an order through your broker. An order tells your broker which stock you want to buy, how many shares you want to add to your portfolio and when the order should be executed. Understanding some of the most common terms that you’ll see when placing an order can help you control the amount that you spend when investing and ensure that you have control over your order’s execution.
The bid price is the maximum price that a buyer on the market is willing to pay for a single share of a specific stock. A bid is not a type of order. However, monitoring the bid price and how it’s changing can help you understand how the market is moving.
The ask price is the lowest price that a seller is willing to accept to sell a single share of a stock that they own. Like the bid price, the ask price can give investors insight into how the market is moving and what they’re likely to pay for shares of the stock they want to invest in.
The spread is the difference between the current bid price and ask price of a share of stock. Stocks with low liquidity (including many stocks under $10) may have a wider spread than mega-cap stocks that see thousands of shares change hands each day.
A limit order is a type of stock order that tells your broker that you want to execute an order at a specific price. For example, if the current market price of FIZZ is $140 per share, you might set a limit order to buy 10 shares of FIZZ at a limit price of $141. This ensures that you won’t pay more than $141 for each share of FIZZ you purchase. If the market price of FIZZ rises above $141, your broker will not execute your order. Limit orders help investors buy stock while also controlling the amount that they pay per share.
A market order is a type of stock order that tells your broker that you want to buy a set number of shares of stock at the current market price. When you place a market order, your broker will fill the order as quickly as possible, regardless of the current market price per share. Market orders are more likely to fill than limit orders, but they provide you with little control over the price you pay per share of the stock you’re investing in.
A stop-loss order is a type of sell order that helps you limit your losses in the event that a stock you’re holding decreases in value. For example, if you purchased FIZZ at a price of $140 per share, you might set a stop-loss order for $136 per share. If the price of FIZZ falls to $136, your broker will automatically sell your shares. This helps limit the amount of money you lose if a stock moves in the opposite direction as you’ve predicted.
A stop-limit order combines the features of both a limit order and a stop order to provide you with more control over the price you pay per share. For example, you might set a stop-limit order to buy FIZZ with a limit price of $145 and a stop price of $140. If the price of FIZZ rises above $140 per share, your broker will begin executing the order. If the price continues to rise above $145 per share, your broker will stop executing your order.
- Execute Your Trade
As soon as you know which type of order you want to place and the price you’re willing to buy, execute your order by submitting it to your broker. Your broker will then carry out the order according to your instructions. If your broker is able to fill your order, you’ll see your shares in your brokerage account.
Best Online Stock Brokers
Not sure where to begin your search? Whether you’re on the hunt for stocks under $20 or you only want to buy FIZZ, these beginner-friendly brokers can help you get started quickly.
FIZZ Stock History
National Beverage Corp. was formed in 1985 to avoid acquisition from telecommunications company Burnup & Sims Inc. National Beverage Corp. produces some of the most consumed carbonated beverages in the country, ranging from La Croix Sparkling Water to Faygo soft drinks. The company went public in 1991 and continued to acquire regional soft drink companies like Spree and Big Shot.
FIZZ, alongside other heavily shorted stocks like Gamestop (NYSE: GME) and AMC Entertainment Holdings (NYSE: AMC) have surged in value thanks to a targeted short squeeze led by forums like Reddit’s r/WallStreetBets after users noticed the stock’s high short interest.
Institutional investors face off with retail investors to control the price of heavily shorted stocks like FIZZ.
Pros to Buying FIZZ Stock
Despite sentiments that FIZZ is riding high on retail investors’ short squeeze, National Beverage Corp. has shown promising fundamentals in the most recent quarter. Despite the onset of the COVID-19 pandemic, National Beverage Corp.’s earnings have remained strong, beating experts’ estimates every quarter since January of 2020. This may indicate that major shorts are unfounded — and that the stock has more potential than institutional investors realize.
Cons to Buying FIZZ Stock
Experts believe that the sudden surge in FIZZ stock is the result of a coordinated effort by forums like Reddit’s WallStreetBets to squeeze out institutional investors who have bet on FIZZ falling in value. The sudden surge in the stock’s price may not have to do with long-term fundamentals but instead sudden investor interest as other heavily shorted stocks (like Gamestop) increase in value.
Brokers have taken steps to limit investors' ability to buy high-volatility stocks like FIZZ. For example, Robinhood has blocked investors from purchasing stocks like Gamestop (NYSE: GME), American Airlines (NASDAQ: AAL) and AMC Entertainment Holdings (NYSE: AMC). Even if you do decide to open a brokerage account, there is no guarantee that your broker won’t immediately limit or remove your ability to buy and sell FIZZ on an arbitrary basis.
Should You Add FIZZ to Your Portfolio?
From long-term potential to short-term volatility, investors put their money in select stocks for a multitude of reasons. If you decide to invest in a highly volatile stock like FIZZ, be sure to do thorough due diligence before you buy.
Whether you buy FIZZ or stocks under $5, you should never invest more money than you can afford to lose. Be sure that you add FIZZ to a fully diversified portfolio in order to protect your investment and secure your financial future.
About Sarah Horvath
Sarah is an expert in the insurance, investing for retirement and cryptocurrency space.