The question many investors have is how to buy Netflix stock? Netflix is one of the most popular streaming services in the world. Even if you don’t have a subscription, chances are you know someone who does. In fact, it’s one of the most valuable companies in America today. Investing in Netflix stock could be a smart choice for you. We’ll cover how to invest in Netflix and give you an overview of the company so that you can make an informed decision.
If you’re interested in buying Netflix shares, it can be done entirely online. While you may already be thinking of investing in Netflix stock, this article does not advise you to invest in Netflix stock. We will share how you can buy stock in companies, with Netflix as an example. Investing in Netflix is an investment decision for which you might want to consult your investment advisor. This is not investment advice by any means.
Overview of Netflix
Netflix, Inc. is headquartered in Los Gatos, California and was founded in 1997 by Reed Hastings and Marc Randolph. Netflix offers a streaming service that provides access to both movies and television shows from many major studios since 2005 as well as content produced in-house. The company also has subsidiaries which produce film and television programs such as the critically acclaimed House of Cards and Orange is the New Black.
The company’s stock (NFLX) trades on the NASDAQ under the ticker symbol NFLX and is part of the Technology sector. Netflix is one of the major subscription based movie/television show services available at a cost in the United States, along with Amazon Video which formerly offered just movies until it included television content as well. Hulu is another such service and Hulu Plus is a paid version of the basic service.
Netflix currently has a market cap of over $234.17 billion and is ranked as the most valuable media company in the world.
If you’re thinking of investing in Netflix, you should look at the stock’s recent performance and its potential for future growth. You should also look at future product announcements and other impacts on the markets Netflix operates in to analyze if any announcement could impact Netflix’s stock adversely.
Netflix’s stock performance in recent years
Netflix’s stock has been one of the world’s top performers in the past five years. In June 2016, NFLX stock was trading at $96.67, and the current price as of June 2021 is $528.08. The company has seen its stock grow by over 446.32% in five years. The pandemic has been a boon for Netflix, as consumers choose to watch shows and spend time indoors instead of going out.
Buying, selling, and trading Netflix shares
Here are the differences between buying, selling, and trading Netflix shares.
Buying Netflix shares: Buying Netflix shares involves finding a broker and placing an order to buy Netflix shares. You would want to buy at a lower price to profit if the stock price goes up.
Selling Netflix shares: If you already hold Netflix stock, you can sell it for a profit if you’d like to. If Netflix’s stock price has increased significantly since you purchased it and if the market conditions look favorable for selling, that is, if you expect the price to drop, you can sell the shares and make a profit. Selling involves finding a broker and placing an order to sell Netflix shares.
Trading Netflix shares: Trading Netflix stock is the same as buying and selling Netflix shares, but it is done over shorter periods. With trading, the goal is to make smaller profits quickly. You also run the risk of making losses rapidly as well. If you’re a new investor, we recommend buying and holding your investments in Netflix for a longer period, i.e., six months to a year or more.
Steps to follow before buying Netflix shares
1. Understand how the stock market works
If you want to invest in Netflix stock, you should understand how the stock market works. You should not panic when stocks go down or buy in a frenzy when stocks trade high.
2. Research Netflix stock
As an investor, it is a good idea to buy stocks in companies that you’re already familiar with and know well. If you are already using a Netflix’s products and trust the Netflix brand, you can buy the shares of Netflix. Before you buy Netflix shares, you should take steps to research the stock and its fundamentals.
You should look at where Netflix gets its revenue from, how its growth looks like, and what its plans are. Most of this information will be available in Netflix’s annual report in the annual letter to shareholders. This letter will share the important updates in the business. The SEC filings of Netflix, conference call transcripts of Netflix, quarterly earnings updates of Netflix, and recent news related to Netflix are good sources of information to analyze the company.
The more analysis you do and the more information you have, you will make more intelligent decisions about investing in Netflix.
3. Examine broader market conditions
You should also look at broader market conditions before you buy Netflix shares. If it is a bull market, the price will go up, and it would make sense to buy Netflix stock immediately. If it is a bear market, the price will go down, and it might be better to wait to buy Netflix stock at a lower price.
How to buy Netflix shares – a step by step guide
Buying Netflix shares is a simple process, even for new investors. If you’re thinking of buying Netflix stock, you must decide whether you want to buy Netflix stock for the short term or the long term. If you’re going to invest in Netflix shares for the short term, you should perform a technical analysis of Netflix stock.
If you want to hold Netflix stock for the longer term, you should perform a fundamental analysis of Netflix. You should also keep yourself updated with news and with developments of Netflix. Here are the steps you need to follow.
1. Select a broker
To buy Netflix shares online, you will need to use an online brokerage platform. You will need to choose a broker that gives you access to NASDAQ, as Netflix is listed here. In general, you should look at the following parameters before selecting a stockbroker.
- Stocks available for trading: The first criteria for selecting the broker is that you should be able to use the broker to trade the stocks you’re interested in.
- Commissions charged: Some brokers charge a higher commission, so if you want to maximize your profits, you would want to choose a broker with lower commissions.
- Account fees: You should also watch out for other fees such as annual fees, inactivity fees, trading platform subscription fees, and fees for research or data. Brokers will also charge a fee for transferring cash or investments or for closing your account. You can avoid many of the fees by choosing a broker that doesn’t charge fees or by opting out of services that cost extra.
- Payment methods: Some brokers are more flexible in their payment methods than others. If you want flexibility in payments, this should be one of your criteria.
- Track record: You should choose a broker based on their track record. The broker that you choose should have a track record of reliability, and they should have been around for a while and have good reviews online.
Our broker reviews can help you select from the best brokers for stock trading. Here are the best stock brokers of 2021.
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2. Open a brokerage account
This is the account in which your Netflix shares will be stored. Opening a brokerage account has become very simple. The steps vary from platform to platform, but you should be good to create your account once you provide your details and some form of identification. Again, the time taken to open an account varies between platforms.
3. Fund your brokerage account
The next step is to log in to your account and deposit money in your brokerage account. Most brokers accept bank and debit card transfers, and some accept transfers through other methods such as Paypal.
4. Decide how many Netflix shares you want to buy
If you’re a new investor, you could start small with a small amount and gradually increase your investment as you get more experienced in the stock market. You can also think about investing in fractional shares, which certain brokers offer. Buying a fractional share means you are purchasing a portion of Netflix stock instead of whole Netflix shares. If the Netflix share is too pricey, you can opt to buy a fractional share of Netflix.
5. Choose your stock order type
All you have to do now is search for the NFLX ticker, specify the number of Netflix shares, choose your order type and click on buy. Once you place your order, your broker will execute the order, and the Netflix shares will be listed in your account.
There are different order types you can place. Let’s look at the most commonly used ones, the market order and the limit order.
The market order instructs your broker to place an order to purchase Netflix stock at the prevailing market price. There are no price parameter restrictions on this order. You should use this order type for stocks that don’t experience wide price swings, generally larger company stocks. Stock prices can vary between seconds.
If a slight price fluctuation does not matter to you, you should place a market order. If you place a market order trade “after hours,” when the markets have closed for the day, your trade will get executed the next day at the prevailing market price.
The limit order instructs your broker to place an order when the Netflix stock reaches a specific price point. It gives you control over the price at which your trade is executed. For example, if a stock is trading at $200, but you value Netflix at $180, the limit order tells your broker to wait till Netflix stock reaches $180. Limit orders are suitable for smaller company stocks that experience wide price swings.
6. Review your position periodically
Once you have purchased Netflix shares, you should monitor the stock according to your investment strategy. You should follow the company’s quarterly and annual results and the news and developments in the company.
Investing always comes with certain risks and Netflix is no different. You can reduce risks by diversifying your portfolio and by avoiding scams by choosing a reliable broker. To recap, you can buy Netflix shares by selecting a broker, opening a brokerage account, depositing money in your brokerage account, placing an order, and reviewing your position periodically.