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 2021 following a spat between short sellers and users on Reddit’s infamous “wallstreetbets” forum. The “short squeeze” was effective initially, with Tesla CEO, Elon Musk, noticing the incredible action and tweeting “Gamestonk!!” while linking back to WallStreetBets for his 4.2 million followers. However, the gains didn’t last, and investors must be patient if they want GME to “pop off” once again.
And for those who have been waiting, GameStop started to sizzle once again in May of 2024 with the return of Roaring Kitty to social media, leaving many with the belief that GME Short Squeeze 2.0 is on the horizon.
But, even if GME skyrockets again, there’s no guarantee that it’s value will remain extraordinarily high for a long period of time.
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.
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.
Bid
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.
Ask
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.
Spread
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.
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 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.
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’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.
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 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.
Stop-Limit Order
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.
Where to Buy GME Stock
- Best For:Active and Global TradersVIEW PROS & CONS:Securely through Interactive Brokers’ website
- Best For:Global Broker for Short SellingVIEW PROS & CONS:securely through TradeZero's website
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.
The stock jumped once again on November 1st and 2nd, 2021. The firm announced a separation agreement with COO Jenna Owens on the previous Friday, allowing investors to process the news before making rash choices. It seems that other people in the executive suite will take over Owens’ responsibilities just 7 months after she started. Most investors saw this announcement as old news, shrugging it off because GameStop is still a strong company. Moreover it was said that Owens was supposed to come from Amazon to make GameStop the “Amazon of video gaming,” but it appears most investors weren’t convinced in the first place.
As of Spring 2022, GME has experienced a cycle of extreme rallies and selloffs, rising above $250 per share and dropping as low as $80 per share. After surging going into April of 2022, GME stock tumbled once again. As of May 25, 2022, GME stock was surging on news that another ”short squeeze” might take place. Investors should remember that the squeeze can produce massive gains for shareholders, but the squeeze could be stopped in its tracks by brokers like Robinhood, who have shut down trading on GME in the past. Going into the fall of 2022, the stock is steadily rising, but economic concerns and consumer sentiment could change the course of GME stock at any time.
As of May 2024, GME stock was pulsating with market buzz around the return of Roaring Kitty to social media. The stock gained nearly 75% on May 13th and 100% in pre-market trading on May 14th, 2024 alone, and everyone is waiting with bated breath to learn what Roaring Kitty will say about GME’s stock, remembering that it was Roaring Kitty who helped start the wild GME short squeeze of early 2021. Add to that 60 million shares of short interest which could tickle the fancy of investors who got involved in 2021.
Will Citadel need to step in to stabilize another fund that’s been shorting GME, or is Roaring Kitty simply testing the waters before starting a new short squeeze on a completely unexpected stock?
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
Is GME a good investment?
GME can be a good investment, but you must do your research and monitor the markets carefully.
Can investors squeeze GME again?
It’s possible for investors to squeeze GME again, but exchanges might shut down those trades as they did in the past.
About Sarah Horvath
Sarah Horvath is a seasoned financial writer with a specialization in investing content. With a keen eye for market trends and a deep understanding of investment strategies, Sarah delivers insightful and informative articles tailored to investors. Her dedication to providing valuable content empowers readers to make informed decisions in the dynamic world of finance. Sarah’s expertise extends across various investment vehicles, including stocks, bonds, cryptocurrencies, and real estate. Whether analyzing market movements, evaluating investment opportunities, or demystifying complex financial concepts, Sarah’s writing is characterized by clarity, accuracy, and actionable insights. Through her engaging content, Sarah strives to educate and guide investors on their journey towards financial success.