Though the retail industry is still reeling from the effects of the onset of the COVID-19 pandemic, Tanger Factory Outlet Centers (NYSE: SKT) has seen a recent influx of interest fueled by a spat between retail investors and short sellers. Shares of SKT have almost doubled in value since November of 2020 and interest in the stock continues to peak.
If you’re interested in investing in SKT or another hot stock, our guide for beginners will help you get started and learn more about investing.
How to Buy Tanger Factory Outlet Centers (SKT) Stock
No matter if you’re buying SKT or you’re looking for stocks under $20 to add to your long-term portfolio, you’ll go through the same basic process to buy a share of stock. Here’s what to expect if you’re buying SKT as your first stock.
- Pick a Brokerage
As a retail investor, you’ll need to open an account with a broker before you can invest in SKT or any other stocks. A broker is a financial institution that is authorized to buy and sell shares of stock on behalf of retail investors according to their instructions. Because SKT trades on the New York Stock Exchange, you’ll have a number of brokers to choose from before you invest.
- Decide How Many Shares You Want
After you open your brokerage account, you’ll need to decide how many shares of stock you want to buy. First, take a look at the current market value of SKT. Though stocks under $5 are well known for changing in value on a minute-by-minute basis, more established stocks like SKT can also undergo periods of intense volatility. Decide how much money you want to invest, then divide it by the current market value of 1 share of SKT to get a rough idea of how many shares you want to add to your portfolio.
- Choose Your Order Type
A stock order tells your broker that you want to buy a certain number of shares of a specific stock. After submitting your order, your broker will execute the trade and deposit the shares into your brokerage account. The best brokers will provide you with a number of order types that you can use to control the amount of money that you pay per share of SKT you invest in as well as when your order is filled. Let’s take a look at some of the most common terms you might see when placing an order through your broker.
A bid is the highest price that a buyer is willing to pay for a single share of any stock. Monitoring the buy price and how it’s changing can help you decide on the best time to place your order.
The ask price is the lowest price that a seller who holds a certain security is willing to accept in exchange for a share of stock. Like the bid price, you can be sure that you’re buying into the stock at the best possible time by monitoring the ask price and how it’s changing.
The spread is the difference between the bid price and the ask price. Stocks with high daily trading volumes usually have a very small spread, while stocks that are more illiquid or stocks under $10 may have very large spreads.
A limit order is a type of stock buy order that gives you control over the price that you bought your shares. For example, if the current price of SKT is $16 a share, you might want to place a limit order for $16. The price you set using your limit order is the maximum price that you’re willing to pay per share. In this example, your broker would execute your order if it was possible to purchase shares of SKT at a value of $16 or below. If the price climbed above $16 a share, your broker will not execute the order.
A market order is a type of stock buy order that tells your broker that you want your order executed immediately. When you place a market order, you won’t need to specify a price that you need your order to be executed at — your broker will buy the shares at the current market rate. While market orders give you less control over the price that you pay per share of stock you buy, they can ensure that your order is filled quickly.
A stop-loss order is a type of sell order that protects you against sudden price drops. When you set a stop-loss order, you’ll specify a price that you’d like to sell your stock at if reached. For example, you might buy SKT at a price of $15 per share and set a stop-loss order for $12 to prevent a loss of more than 20% of your initial investment. Your broker will automatically execute a stop-loss order if your pre-determined price is reached.
A stop-limit order combines the characteristics of a stop order and a limit order. When you place a stop-limit order, you’ll specify both a lower stop price and a higher limit price. If you reach your stop price, your order will convert to a limit order until the upper limit price is reached. For example, you might set a stop-limit order for SKT with a stop price of $16 and a limit price of $20. After placing your order, your broker will begin executing your order when SKT reaches a price of $16 a share. Your broker will terminate your order if the price of SKT rises above $20. This can help you buy in at specific times without being tied to your computer.
- Execute Your Trade
After placing your order, it’s up to your broker to execute it according to your specifications. When your order is complete, your broker will typically notify you via email or push notification depending on the platform you’re using. If your broker cannot complete your order (for example, because the stock has maintained a price above your limit price) they may cancel it at the end of the trading day.
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SKT Stock History
Tanger Factory Outlet Centers is a real estate investment trust (REIT) that invests in shopping centers and outlet stores. Tanger Factory Outlet Centers is structured in the same way that most other REITs operate — Tanger rents out space to commercial tenants and returns a portion of its income back to shareholders in the form of dividends.
Tanger Factory Outlet Centers was established as a commercial REIT in May of 1993, when it held its initial public offering. Shares of SKT reached an all-time high on August 1, 2016, when shares traded at a price of $40.18 per share. Though SKT has seen a steady decline in value since this time, the stock has seen a recent resurgence thanks to a coordinated short squeeze originating on Reddit’s WallStreetBets forum, an online community devoted to discussing investment ideas and strategies.
New interest in SKT peaked when Reddit users began targeting heavily shorted companies.
As of November 2021, SKT stock was moving as it improved guidance for Q3 and noted that rent spreads were better as the COVID-19 pandemic waned.
President and CEO Stephen Yalof. said, "Our rent spreads improved by 240 basis points sequentially on a cash basis. We also benefited from significant percentage rental growth, which was more than two and a half times the comparable 2019 period during the third quarter.”
Pros to Buying SKT Stock
A short squeeze occurs when the price of a security jumps sharply after many investors “short” the stock by betting on its failure. When investors who have shorted see that the price of the security moves upward, they are forced to buy in to prevent further losses. This further increases the price of the stock by adding upward momentum.
SKT, along with other heavily shorted stocks like AMC Theaters (NYSE: AMC) and GameStop (NYSE: GME) has made international headlines as the targets of a market-wide short squeeze coordinated by Reddit users. As the short squeeze on these stocks continue, it’s possible that SKT is forced to continue to climb in value as investors exit their positions.
Cons to Buying SKT Stock
Though a short squeeze has the potential to increase the price of a security, it doesn’t indicate a change in the underlying fundamentals of the company. In addition to the onset of the COVID-19 pandemic (which hit physical shopping centers heavily) SKT’s stock price has been on a steady decline since 2016. If investors don’t sell their stock before the end of the short squeeze, the price of the stock could quickly plummet in value, leaving investors with vastly overpriced shares of a security that doesn’t have the financials or fundamentals to maintain its value during the squeeze.
Should You Buy SKT?
If you do decide to add a very volatile stock like SKT to your list of investments, be sure that you use it only as a complement to a larger, more diversified investment portfolio. This will help protect your initial investment and ensure that your losses are limited in the even that SKT moves in the opposite direction as you anticipated.