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Though video game stocks saw a massive influx of investing interest due to the COVID-19 pandemic and stay-at-home orders, few could have predicted the monumental rise of GameStop (NYSE: GME). GameStop’s stock skyrocketed over 680% in January alone following a spat between short sellers and users on Reddit’s infamous “wallstreetbets” forum. Tesla CEO Elon Musk even noticed the incredible action, tweeting “Gamestonk!!” and linking back to WallStreetBets to his 4.2 million followers.
Are you thinking about investing in GME? Our guide for beginners will help you get started, open a brokerage account and place your first buy order today.
Latest news on GME:
- What’s It Like To Hold GameStop Stock For Years And Still Miss Out On Millions In Gains? Ask Bill Miller
- Could GameStop Be Getting Into NFTs?
How to Buy GameStop (GME) Stock
If you’ve ever invested in the stock market, you’re already familiar with the basic steps you’ll go through when buying GameStop stock. Here’s how to get started if this is your first time investing.
Pick a Brokerage
Regardless of if you’re buying GameStop stock to hold in the long term or you’re searching for stocks under $20 to day trade, the first step to investing in any company is opening an account with a broker. A broker is a financial services company that buys and sells shares of stock on your behalf, sometimes in exchange for an annual fee or commission. There are dozens of brokers offering trading platforms and online accounts, and every broker located in the United States will allow you to buy and sell GameStop stock, as GME is currently listed on the New York Stock Exchange.
Some of the factors that you might want to consider when selecting a broker include:
- Any fees the broker charges, either per-trade or annually
- The types of research offerings the broker offers
- The broker’s platform (is it aimed at beginners or does it offer a range of charting tools for more advanced users?)
- Foreign markets and cryptocurrency markets, if you’re looking for this access
- The types of orders the broker supports
Not sure where to begin your search? Browse a few of the best brokers for beginners below.
Decide How Many Shares You Want
After your brokerage account is open and funded, decide how many shares of GME you’d like to purchase. Begin by taking a look at the current market price of GME and the amount of money that you want to invest. Assume that if you invest today, you’ll pay near the market price. Remember that your investment can decrease in value at any time, so you should never invest more money than you can afford to lose. You may want to track and monitor the changing price of GME for a few days before you invest to be sure that you’re buying at the most advantageous time.
Choose Your Order Type
The type of order you choose will tell your broker when you want your order to be executed, the price that you want to pay for each share of stock and more. Choosing the right kind of order gives you more control over its execution. Here are a few of the most common phrases you might encounter when you place your order.
The bid price refers to the highest price that a buyer is willing to pay for a single share of any stock. Though a bid isn’t an order type, knowing the bid price and how it’s changing can help ensure that you don’t overpay for your shares.
The ask price is the lowest price that a seller is willing to accept for a single share of any stock they hold. Like a bid, an ask price isn’t a type of order, but monitoring both the bid and the ask can help you decide when to buy.
The spread is the difference between the bid price and the ask price. Stocks under $5 and those that have low daily trading volumes might have a wide spread between the bid and the ask, while major players on the market are likely to have low spreads that won’t affect your trading.
A limit order is a type of stock order that tells your broker that you want to buy a stock but only if the order can be executed at or below a specific price. For example, you might set a limit order that tells your broker that you want to buy GME stock at a maximum price of $195 a share. If the price of GME falls below $195, your broker will execute the order. If the price of GME rises above $195 a share, your broker will halt the order until prices drop again. This gives you more control over the price you pay per share, which can help you stick to a budget.
A market order is a type of stock order that tells your broker that you want to buy the next available shares of the stock you’re interested in, regardless of how the market is moving. When you place a market order, you won’t be asked to specify a price that you’d like your order to be executed at — your broker will simply fill the order as soon as it is possible to do so. Market orders give you less control over the price that you pay per share of the stock you’re buying but they’re also more likely to be filled than limit orders.
A stop-loss order is a type of sell order that tells your broker that you want to liquidate your investment if your security falls to a certain price. For example, let’s say you bought 10 shares of GME stock at an average price of $200 a share. You might set a stop-loss order at $196. This means that if the price of GME falls to $196, your broker will automatically sell your shares. Stop-loss orders help you prevent excessive loss by selling off your investments when they reach a low-end price threshold.
A stop-limit order combines the characteristics of both a limit order and a stop-loss order. When you place a stop-limit order, you’re asked to specify both an upper limit price and a lower stop price. For example, if you’re buying GME, you might set a limit price of $205 and a stop price of $195.
If the price of GME rises above $195, your stop-limit order will be converted to a limit order. From here, your broker will fill the order as long as GME stock can be purchased for $205 a share or less. If the price rises above $205, your broker will stop filling the order. This gives you as the investor more control over the price that your order is filled at.
Execute Your Trade
After you’ve completed your order sheet and submitted it to your broker, you can relax. Your broker will execute the order following your instructions. The amount of time it will take to fill your order will vary depending on current market conditions, the average price of GME and the type of order you placed. Most brokers will notify you by email or push notification when your order is filled. Depending on your broker, you may or may not need to place the order again tomorrow if your broker couldn’t fill it according to your specifications.
GME Stock History
Headquartered in Texas, GameStop is a video game, console and gaming merchandise retailer. The company has expanded across the United States and into Canada, Australia, Europe and New Zealand. GameStop currently operates over 5,000 physical stores alongside an online retail space.
GameStop’s most successful years financially were between 2004 and 2016. After acquiring domestic competing video game retailer EB Games for $1.44 billion, GameStop would continue acquiring competitors across Europe, which allowed the company to expand operations. This growth slowed near the end of 2016 until the recent resurgence, as GameStop began to compete with online gaming retailers like Steam.
After a slow start to the year, GameStop’s stock has seen a massive surge in value.
Pros to Buying GME Stock
As the continuing effects of the COVID-19 pandemic are felt around the country, video game retailers offer opportunities for investors. Despite the decline in public interest toward physical video games, video game sales continue to stay steady. GameStop’s 2019 change in management and new marketing towards retrogaming and competitive gaming. Though GameStop’s recent volatility may not be sustainable, GME could prove to be a stable long-term investment for those looking to enter the ever-expanding video game market.
Cons to Buying GME Stock
If you do plan to invest in GME, understand that you may be taking a risk on a stock showing inflated growth. The current surge in value of GME has gained media attention thanks to coordinated efforts of multiple social media networks and chat groups to buy the stock en masse to earn money from short sellers. GameStop’s stock doubled after earning reports despite the fact that the company had missed earnings estimates. Some analysts have even referred to this phenomenon as a “meme stock bubble.” It’s possible that, after this initial hype wears off, GME could crash down in value quickly and without notice.
Invest for the Future
Whether you’re investing in GME, shorting or searching for stocks under $10 to add to your long-term portfolio, it’s important to do your own due diligence before you invest. Though you risk more investing in GME compared to investing in diversified funds, any type of investment can decrease in value at any time. Never invest more money into your portfolio than you can afford to lose, and diversify your holdings to limit losses in the event that the market turns.
Frequently Asked Questions
How can I buy GameStop?
You can buy GameStop by placing a buy order with a broker. First you must open a brokerage account if you don’t currently have one.
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