As short sellers and retail investors continue to battle it out over heavily shorted companies like Gamestop (NYSE: GME) and AMC Theaters (NYSE: AMC), the Reddit revolution spills beyond targets of the WallStreetBets forum. The iRobot Corporation (NASDAQ: IRBT) joined other stocks soaring thanks to high short floats, and investors are looking for potential momentum plays during this turbulent time.
Ready to jump in on the squeeze and investing in IRBT? Do your own due diligence and understand both the pros and cons of this investment. Our guide for beginners will help you get started and make your first purchase.
How to Buy iRobot Corporation (IRBT) Stock
Whether you’re planning to buy 1,000 shares of IRBT or you’re looking for stocks under $5 to scalp, the process to invest in stocks is always similar. Let’s take a look at a few of the basic steps you’ll go through when you buy your first share of stock.
- Pick a Brokerage
A broker is a financial service provider that is authorized to buy and sell stocks on behalf of retail investors. Dozens of brokers operating in the United States, and almost every exchange will allow you to buy and sell IRBT as a stock that trades on the NASDAQ. Some of the factors you might want to consider when selecting a broker might include:
- The type of platform each broker offers
- Access to additional markets (for example, foreign brokers or cryptocurrencies)
- Decide How Many Shares You Want
After your brokerage account is open and funded, you’ll need to decide how many shares you want to buy. Take a look at the current market price of IRBT and the total amount of money you want to invest. Never invest more money than you can afford to lose, especially on an asset showing a high level of volatility.
- Choose Your Order Type
When you’re ready to place an order using your brokerage platform, the first decision you’ll need to make is which type of order you want to place. Most brokers provide you with access to multiple order types, and the order you choose will determine when your shares are purchased and the price you pay per share. Let’s take a look at a few of the most common order types and terms you’ll see when investing.
The bid price is the highest possible price that a buyer is willing to pay for a share of a particular stock.
The ask price is the lowest price that a trader who owns a share of a particular stock is willing to sell shares for.
The spread is the difference between the bid price and the ask price. Stocks with a high daily trading volume tend to have very small spreads, while less liquid stocks and stocks under $10 may have a higher spread that affects how much you’ll pay for the shares you want to buy. Monitor the spread and how it’s changing to get the most accurate estimate of what you’ll pay when you place your buy order.
A limit order allows you to buy shares of stock at or below a certain price. When you place a limit order, you’ll specify how many shares of stock you want to buy as well as a maximum price you’re willing to pay per share. If your broker can execute your order at or below your limit price, they will buy the shares and deposit them into your account. If the price of each share rises above your limit price, your broker will stop executing your order.
A market order is a type of order that is executed as soon as possible. When you place a market order, you won’t specify a price that you want the order to be executed at — only a number of shares that you want to buy. This is because your broker will execute the order as quickly as possible at the current market price. In most cases, market orders are closed in a matter of just a few seconds.
A stop-loss order is a type of sell order that helps protect investors from sharp declines in stock prices. When you place a stop-loss order, you’ll specify a price that, if reached, you’d like your investment liquidated at. For example, if you bought 100 shares of IBRT at a price of $120 per share, you might set a stop-loss order for a price of $108. If the price of IBRT falls to $108, your broker will automatically execute your order and sell your shares. Stop-loss orders can help you control losses by limiting the maximum percentage loss you can sustain.
A stop-limit order gives you more control over the price that your buy order is executed at. Your stop price is the price that you’d like your order to begin executing at, while the limit price is the maximum price that you’re willing to pay per share. If the stop price is reached, your order will turn into a limit order and begin executing. If the limit price is reached, your broker will stop filling the order. A stop-limit order allows you to choose a range of prices between which you want to invest.
- Execute Your Trade
Double check your order to be sure that you have entered the right information before you place your order. If everything looks correct, submit your order through your broker. From here, your broker will work on executing your order according to your specifications. Depending on the type of order you place, your broker may close your order at the end of the day if it cannot be filled or they may leave it open for up to 90 days.
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IRBT Stock History
iRobot is an American technology company based in Bedford, Massachusetts. The company was founded in 1990 and had its initial public offering in November of 2005. iRobot is responsible for the design and manufacturing of both defense and military robots as well as commercial robots designed to be used in the home. Some of the company’s most popular offerings include the Roomba (a cleaning robot), the Braava (a mopping robot designed for use on hardwood floors) and the now discontinued Verra (a robot designed to clean the bottom of in-ground pools).
IRBT has seen a resurgence after a deep price slide that began in 2019.
iRobot’s stock saw a steady increase in value from November of 2015 through July of 2017. In February of 2019, iRobot’s stock peaked at an average daily trading price of about $125 per share. Sales began to decline in March of 2019, when competitors in the cleaning robot niche began to enter the market and China increased tariffs on the importation of the robots by 15%.
The stock has seen a recent resurgence in interest through a Reddit-coordinated targeting of heavily shorted stocks. In February 2020, the stock had regained its value to almost the same all time high seen in February of the previous year.
Pros to Buying IRBT Stock
Though most of the attention drawn to IRBT has been the result of a Reddit buying frenzy targeting heavily shorted stocks, IRBT has also shown strong fundamentals as well. Among heavily shorted stocks caught in the current short squeeze, IRBT maintains one of the best performance records for earnings, having beaten experts’ earnings estimates for the last 4 quarters. Though the pricing power of the robot vacuum provider has seen a rough year, it’s possible that new political developments will positively impact tariffs and bring revenues back up again.
Cons to Buying IRBT Stock
A short squeeze occurs when a large group of investors decide to drive up the price of a security in the hopes that short sellers will need to buy back the stock at inflated prices. The sharp increase in value per share of IRBT may have less to do with the underlying fundamentals of the stock and the company and more to do with a market wide buying frenzy targeted at heavily shorted stocks. Because IRBT falls into this category, it’s possible that the price of the stock can crash suddenly and without notice.
Invest with Intelligence
Whether you’re looking to take advantage of momentum plays or you’re searching for stocks under $20 to hold in your portfolio long term, it’s important to do your own research with professional sources before you invest. As the market is currently in a period of high volatility, you should also invest in speculative assets as a small percentage of your overall portfolio.