How to buy Netflix stock (NFLX)
Updated: August 09, 2024
Netflix has been making it easier for people to access on-demand entertainment since 1997. The company recorded a $5.4 billion profit in 2023 and remains one of the few profitable streaming companies. Netflix has 277.65 million subscribers who pay monthly subscriptions to use the service. Netflix offers a vast content library to keep subscribers engaged, and the recent $6.99/month plan with ads has retained users who struggle with tighter budgets. This guide explains how to buy Netflix stocks, as well as some important details to consider before buying shares.
How to buy Netflix stock
Learning how to buy Netflix stock and building your position in the stock can lead to long-term gains if the stock price increases. The buying process for Netflix is the same one you can use for any publicly traded company. Investors can follow these steps to buy Netflix stock.
- 1.
Open a brokerage account: Investors have to open a brokerage account before they invest in stocks. Once you find the right brokerage firm for your needs, you’ll have to provide personal information, such as your name, email address and Social Security Number to open an account. It only takes a few minutes to set up a brokerage account at most firms.
- 2.
Start a new order: You’ll have to open an order ticket to buy or sell any stock. Investors can initiate market orders to buy shares at the current price. They can also set limit orders so they only purchase shares once it falls to a certain level. Market orders go through right away, regardless of the price, while limit orders only go through if the stock reaches the designated price.
- 3.
Specify Netflix stock: You can search for a stock in an order ticket by typing its name or ticker. Most brokerage accounts will display Netflix stock if you type “Netflix.” However, it’s also good to know the ticker symbol. Netflix trades under the ticker symbol NFLX. The order ticket will display Netflix’s current price per share once you provide the ticker symbol. The order ticket may also provide real-time price changes to the stock.
- 4.
Decide on the number of shares: You must specify how many shares you want to buy. Investors can only use their available cash to buy shares. If a stock costs $500 and you have $1,200 in your account, you cannot buy three shares of the stock. However, investors can buy fractional shares. You can buy a partial share in a $500 stock even if you have less than $500 available in your account.
- 5.
Place the order: After verifying the ticker, number of shares and the total investment, you can place the order. Market orders go through right away, and Netflix stock should show up in your brokerage account if you refresh your account. Limit orders may take more time. You can cancel a limit order before Netflix reaches your desired price per share, or keep it open in the background.
Netflix stock offers exposure to the top on-demand video streaming giant. The company has rising profit margins and generates annual recurring revenue from its subscribers. You have to open a brokerage account before you can invest in Netflix stock. These are some of the top providers that allow you to buy stocks.
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About Netflix
Netflix is a leading video streaming company that offers on-demand content. The company’s business model revolves around monthly subscription plans and advertisements. Netflix initially leaned into other studios’ movies and TV series, but now invests billions of dollars each year into original content. Netflix is available in multiple languages and offers entertainment across various genres.
Is Netflix a good stock to buy?
Netflix has outperformed the S&P 500 over the past five years. Although this comparison indicates that Netflix is doing better than the broad stock market, it’s also important to gauge Netflix’s performance against its competitors. Netflix outperforms most of the traditional media companies that are adapting to streaming, such as Disney, Comcast and Paramount.
Netflix has also outperformed Amazon over the past five years but remains behind some streamers, such as Alphabet and Apple, during that period. However, these big tech giants aren’t pure streaming plays.
Alphabet has multiple search engines and Google Cloud, Amazon has an online marketplace and Amazon Web Services, and Apple has its devices and Apple Services. That’s barely scratching the surface for each of those companies. Netflix’s results are solely based on its streaming business rather than a conglomerate of business segments.
A password crackdown contributed to Netflix’s strong results throughout 2023, since people had to create paid accounts instead of sharing accounts with their family and friends. However, the financial boost from this catalyst should fade over time. Most people impacted by this crackdown have already created new accounts or decided to stop watching movies and shows on Netflix. This development can result in lower revenue growth rates in future quarters.
Netflix’s 10-year return is almost 1,000% as of this writing, but strong historical returns don’t ensure enticing gains in the future. Shares dropped by more than 70% between November 2021 and May 2022. Although shares recovered nicely from 2022 lows, it serves as a reminder of what can happen if the economy or company’s financial growth starts to slow down.
Pros and cons of buying Netflix stocks
Pros
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Netflix continues to grow its revenue at a faster rate than most of its competition
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Five-year returns outpace the S&P 500, while peers such as Disney, Comcast and Paramount lost value during the same stretch
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Netflix reports double-digit profit margins, while most competitors have single-digit profit margins or net losses
Cons
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Netflix needs new avenues for growth as tailwinds from the password crackdown start to fade
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Higher valuation than the S&P 500 and most streaming stocks valuation (based on the P/E ratio)
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Members may not respond as well to future price hikes due to the elevated cost of living, which can reduce revenue and lead to a lower stock price
FAQs
Marc Guberti is a certified personal finance counselor and a freelance writer who resides in Scarsdale, New York. His work has been featured in US News & World Report, Newsweek, InvestorPlace, and other publications.
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