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Although video game stocks have seen a massive influx of investor interest due to the COVID-19 pandemic and stay-at-home orders, few could have predicted the monumental rise of GameStop (NYSE:GME). GameStop shares soared more than 680% in January 2021 following a spat between short sellers and users on Reddit’s infamous “wallstreetbets” forum. The “short press” was initially effective, with Tesla CEO Elon Musk noticing the incredible action and tweeting “Gamestonk!!” while referring to WallStreetBets for its 4.2 million followers. However, the gains did not last and investors need to be patient if they want GME to ’emerge’ once again.

And, even if GME soars again, there is no guarantee that its value will remain extraordinarily high for long.

Do you plan to invest in GME? Our beginner’s guide will help you get started, open a brokerage account, and place your first buy order today.

How to Buy GameStop (GME) Stock

If you’ve ever invested in the stock market, you already know the basic steps you’ll follow when buying GameStop stock. Here’s how to get started if this is your first time investing.

  1. Choose a brokerage

    Whether you’re buying GameStop stock to hold for the long term or looking for stocks under $20 a day, the first step to investing in a business is opening an account with a broker. A broker is a financial services company that buys and sells stocks on your behalf, sometimes for an annual fee or commission. There are dozens of brokers offering online trading platforms and accounts, and every broker located in the United States will allow you to buy and sell GameStop shares, as GME is currently listed on the New York Stock Exchange.

    Some of the factors you may want to consider when selecting a broker include:

    All fees charged by the broker, either per transaction or annually
    The types of research offers offered by the broker
    The broker’s platform (is it for beginners or does it offer a range of charting tools for more advanced users?)
    Foreign markets and cryptocurrency markets, if you are looking for that access
    Order types supported by the broker

    Not sure where to start your search? Browse some of the best brokers for beginners below.

  2. Decide how many shares you want

    Once your brokerage account is opened and funded, decide how many shares of GME you want to buy. Start by taking a look at the current market price of GME and the amount of money you want to invest. Suppose if you invest today, you will pay close to the market price. Remember that your investment can lose value at any time, so you should never invest more money than you can afford to lose. You may want to follow and monitor the price performance of GME for a few days before investing to ensure that you are buying at the most advantageous time.

  3. Choose your order type

    The order type you choose will tell your broker when you want your order executed, the price you want to pay for each action and more. Choosing the right type of order gives you more control over its execution. Here are some of the most common expressions you might encounter when placing your order.
    Offer
    Bid price refers to the highest price a buyer is willing to pay for a single share of any stock. Although a bid is not a type of order, knowing the bid price and its movement can help you ensure that you are not paying too much for your shares.
    Ask
    The ask price is the lowest price a seller is willing to accept for a single share of any stock they own. Like a bid, an ask price is not a type of order, but monitoring both bid and ask can help you decide when to buy.
    propagated
    The spread is the difference between the bid price and the ask price. Stocks under $5 and those with low daily trading volumes may have a wide bid-ask spread, while major market players are likely to have small spreads that will not affect your negotiation.
    Limit order
    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 given price. For example, you can set a limit order that tells your broker that you want to buy GME shares at a maximum price of $195 per share. If the price of GME falls below $195, your broker will execute the order. If the price of GME rises above $195 per share, your broker will halt the order until prices fall again. This gives you more control over the price you pay per share, which can help you stick to a budget.
    market order
    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 are interested in, regardless of how the market is moving. When placing a market order, you will not be asked to specify a price at which you wish your order to be executed – 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 you pay per share of the stock you buy, but they are also more likely to be filled than limit orders.
    Stop-loss order
    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 below a certain price. For example, let’s say you bought 10 GME shares at an average price of $200 per share. You can set a stop-loss order at $196. This means that if the price of GME drops to $196, your broker will automatically sell your shares. Stop-loss orders help you avoid excessive losses by selling your investments when they reach a low price threshold.
    Stop limit order
    A stop-limit order combines the characteristics of a limit order and a stop-loss order. When you place a stop-limit order, you are asked to specify both an upper limit price and a lower stop price. For example, if you buy GME, you can set a limit price of $205 and a stop price of $195.

    If the price of GME exceeds $195, your stop-limit order will convert to a limit order. From there, your broker will fill the order as long as GME shares can be purchased for $205 per share or less. If the price exceeds $205, your broker will stop filling the order. This gives you, as an investor, more control over the price at which your order is executed.

  4. Execute your trade

    After completing your order sheet and submitting it to your broker, you can relax. Your broker will execute the order following your instructions. The time it takes to fulfill your order will vary depending on current market conditions, GME’s average price and the type of order you have placed. Most brokers will notify you via email or push notification when your order is executed. Depending on your broker, you may or may not need to place the order again tomorrow if your broker was unable to fill it to your specifications.

History of GME shares

Based in Texas, GameStop is a retailer of video games, consoles and gaming products. 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 financially successful years were between 2004 and 2016. After acquiring competing domestic video game retailer EB Games for $1.44 billion, GameStop would go on to acquire competitors across Europe. , which allowed the company to expand its activities. This growth slowed towards the end of 2016 until the recent resurgence, as GameStop began to compete with online game retailers like Steam.

The stock surged again on November 1 and 2, 2021. The company announced a separation agreement with COO Jenna Owens the previous Friday, allowing investors to process the news before making rash choices. It looks like other people in the executive suite will take on Owens’ responsibilities just 7 months after he takes office. Most investors saw this announcement as old news, ignoring it because GameStop is still a solid company. Additionally, it’s been rumored that Owens was supposed to come over from Amazon to make GameStop “the Amazon of gaming,” but it seems most investors were initially unconvinced.

In the spring of 2022, GME experienced a cycle of extreme rallies and selloffs, breaking above $250 per share and dropping as low as $80 per share. After surging in April 2022, GME stock fell again. As of May 25, 2022, GME stock was exploding on the news that another “short squeeze” might be taking place. Investors should remember that the crunch can produce massive gains for shareholders, but the crunch could be stopped dead by brokers like Robinhood, which have halted trading on GME in the past.

Advantages of buying GME shares

As the continued effects of the COVID-19 pandemic are felt across the country, video game retailers are providing opportunities for investors. Despite declining public interest in physical video games, video game sales remain stable. Change in direction of GameStop in 2019 and new marketing towards retrogaming and competitive games. While 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 gaming market.

Disadvantages of buying GME shares

If you are considering investing in GME, be aware that you may be taking a risk on a stock showing inflated growth. The current surge in GME’s value has drawn media attention thanks to the coordinated efforts of several social networks and newsgroups to buy the shares en masse to make money from short sellers. GameStop shares doubled after receiving reports despite the company missing earnings estimates. Some analysts have even called this phenomenon a “stock market bubble meme”. It is possible that after this initial hype dies down, GME could drop quickly and without notice.

Investing for the future

Whether you’re investing in GME, selling short, or looking for stocks under $10 to add to your long-term portfolio, it’s important to do your own due diligence before investing. Although you are more risky investing in GME than investing in diversified funds, any type of investment can lose value at any time. Never invest more money in your portfolio than you can afford to lose and diversify your holdings to limit losses in the event of a market downturn.


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