How to Invest in Netflix
Netflix has changed the way we watch TV. Interested in investing in this streaming giant? Read on to learn how to invest in Netflix with a little as $1.
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Remember the days when Netflix was a DVD mail rental service? Since its humble beginnings in 1997, Netflix has become a leading streaming service and media production company.
It currently has over 200 million paid subscribers in over 190 countries. And it is still one of the best-performing S&P 500 stocks in the past decade. It is no surprise that many investors continue to look for ways to invest in Netflix.
So how can you benefit from Netflix's success?
Here's a step-by-step guide to how to buy Netflix stock. We'll also discuss some factors to consider before investing in a company.
Is Netflix on the stock market?
Yes, Netflix is publicly traded on NASDAQ with the ticker symbol NFLX.
Netflix went public on May 23, 2002, offering shares for just $15 apiece. Since then, it's had 2 stock splits, and its highest stock price was $691.69 in November of 2021.
Now, here's how you can buy Netflix stock.
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How to Buy Netflix Stock
You can buy Netflix stock using any brokerage or trading app. There are no special qualifications needed.
1. Create an Account with a Brokerage
Before you can start investing in Netflix, you will need to create an account with a brokerage firm or trading app. You can visit the brokerage's website or app and follow the instructions there to set up your account.
Typically, you'll need to provide:
- Your name
- Social Security number
- Address, phone number, and email
- Date of birth
You may also need to provide a copy of your driver's license or passport to verify your identification.
Don't have a ton of money to invest? Look for a brokerage that supports fractional shares. This means you can purchase just a tiny piece if you don't have enough money for a full share. This lets you to still invest in Netflix even if you only have $10.
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Robinhood | M1 Finance | Webull | |
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Get a Free Stock (worth between $5 and $200) - | M1 Investment Account - Up to $500 Bonus - | Up to $100 Transfer Fee Reimbursement - | |
Benefits and Features | |||
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| Minimum Deposit | |||
| Fractional Shares | |||
| Good For | DIY investing with passive portfolio management | Experienced investors; Active traders | |
| Visit Site | Visit Site | Visit Site | |
Robinhood: Pricing information from published websites as of 04/18/2020. M1 Finance: Pricing information from published website as of 02/28/2020 | |||
- Taxable: A general-purpose investment account
- Joint: An account shared between two individuals
- Retirement (includes Traditional and Roth IRA)
- 529 College Savings
- Custodial: An account set up for a minor
Keep reading for our top recommended brokers to buy Netflix stock.
2. Fund Your Account
Once your account is created, you will need to fund it to start trading. Just link it to your bank account so you can transfer money. Depending on the brokerage, you may need to deposit a minimum amount to start trading.
Be sure to read through the terms and conditions of the platform carefully before making any investments.
Now, you can start investing in Netflix stock.
3. Search for Netflix (NFLX)
Once you've funded your account and are ready to buy, search for Netflix stock using their ticker symbol 'NFLX'.
The company should appear, along with Netflix's other relevant data, such as current stock price and daily average volume.
Click on the company listing for more detailed information, including news updates and analyst ratings. It's smart to research the company and consider any risks before investing.
4.Decide How Much You Want to Buy
The next step is deciding how much Netflix stock you want to buy. Most platforms will let you enter how many shares or the exact dollar amount you want to buy.
For example, if the investing app allows for fractional shares, you can say that you want to buy $50 worth of NFLX (instead of full shares).
After entering the details, you are now ready to place your order.
5. Place your order
Once you have entered all the information, review it one last time and click 'place order' to complete your purchase of Netflix stock. Your order will be processed in a few minutes, and you will receive a confirmation when it has gone through.
After that, you can view your holdings in your account portfolio and track their performance over time.
- Market order: Execute the transaction now at the current market price.
- Limit order: Set a specific price at which you wish to buy. This gives investors more control. But if the stock never hits your price, the trade will never be executed.
Best Brokerages to Invest in Netflix
Here are some of our top recommended brokerages to buy Netflix shares. All these brokerages have no trading commissions.
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Robinhood
Robinhood is one of the most popular investment apps for beginners. It has no minimum to get started. A big benefit is that it supports fractional shares, allowing you to invest in stocks with as little as just $1.
M1 Finance
M1 Finance is a unique hybrid DIY brokerage and robo-advisor. You choose your own stocks and build your own portfolio. Then M1 will automatically manage it for you at no cost. It also supports fractional shares. The minimum to start is $100.
Stash Invest
Stash Invest is designed for new investors who need a little handholding. It guides you to pick stocks aligned with your goals and risk tolerance, but you can also choose your own stocks. You can purchase fractional shares. There is a monthly fee starting at $3/mo.
Webull
Webull also has no trading fees or minimum investment. It offers better research tools and analytics for more experienced investors. It's also a good choice for active traders with free extended trading hours. Webull offers fractional shares for as little as $5.
Fidelity
Fidelity is a great choice if you're looking for a full-service brokerage with a wide variety of account types and other investment products. There is no account minimum. Fidelity also offers fractional shares from as little as $1.
Pros and Cons of Buying Netflix Stock
Pros:
- Impressive subscriber growth since 2016
- Growing revenue yearly
- Constantly producing new original content
- Continues to expand internationally
Cons:
- Growing competition from Amazon Prime Video, Disney+, Hulu, and Apple TV+
- Increasing debts from content production costs
Why Invest in Netflix?
In Q1 2023, Netflix remained the top streaming platform in the US, holding a market share of 44.21%, a decrease of 5.56% from Q1 2022. During the first quarter of 2023, there was a 3.7% increase in revenue and an improvement in operating margin.
With plans to create more original programming, Netflix's share price is expected to increase as they expand their customer base and grow their business.
The per-member advertising economics are performing well. For example, the ads plan performs better in the US than the standard plan. This means that their ads pay for operating expenses, and profit mostly comes from the subscriptions.
So, this month they are improving the ads plan by adding 1080p video quality and two concurrent streams in all 12 ads markets. They plan to start with Canada and Spain today. These improvements will make Netflix's offering more attractive and strengthen engagement for new and existing ad plan subscribers.
- Netflix missed its projected subscriber growth, gaining only 1.75 million in Q1 2023.
- 232.5 million paying users worldwide.
- Revenue for Q1 increased to $8.16 billion, up 3.7% YoY.
- Net income decreased from $1.6 billion to $1.3 billion
- Earnings-per-share increased significantly from 12 cents to $2.88 in Q4 2022.
If you are not yet convinced, read on to learn more on the current performance of Netflix stock.
What is Netflix's valuation?
Netflix's current valuation and ratios show that it is undervalued and has a profitable future.
Their current market capitalization is $128.4 billion, with a price-to-earnings ratio of around 34.33 as of May 2023. These show that Netflix is trading far above the industry average.
A significant increase in sales and net income can cause a decrease in PE Ratio over time. Netflix's sales grew from $3.6 billion in 2012 to $31.6 billion in 2022. Also, their net income increased from $17 million in 2012 to $4.5 billion.
To better understand, here are two common ways investors measure a company's value.
- Market Capitalization (Market Value)
Market capitalization (Market value) is how we measure the size of a public company. We do this by multiplying the current stock price by the number of shares outstanding. - Price to Earnings Ratio (P/E Ratio)
The P/E ratio shows if a company is undervalued or losing money. Low but positive means high earnings, while high negative means heavy losses.
- Companies with a P/E ratio above 30 or in the negative range are often labeled as "growth stocks." This suggests that investors predict future growth or profitability.
- While positive P/E ratio below 10 are generally regarded as "value stocks," indicating that the company is already profitable and unlikely to see significant growth in the future.
Next, let's see how all this information fits your investment portfolio.
Is Netflix Stock Right for You?
In investments, the stock price is not the only factor you need to check. In addition, consider if Netflix fits your goals and risk tolerance. This comes down to what kind of investor you are.
Are you looking for passive income through dividends? If yes, know that Netflix stock does not pay dividends. Is this still the right choice for you?
Also, how much risk can you afford? Remember that stocks can be volatile, some sectors more so than others.
Though Netflix has done exceptionally well in the past decade, there are arguments that the FAANG bubble (Facebook, Apple, Amazon, Netflix, and Google) could burst. So it's best to commit to holding your investment for a few years to ride out any downturns.
Are you having second thoughts on Netflix stock? Or do you simply want to diversify your portfolio? Try also investing in other leading streaming platforms. Here's a quick review of these companies.
Alternatives to Netflix Stock
The streaming industry is growing with quality platforms like Amazon Video and Hulu, along with Netflix. These are also good options for most investors.
- Amazon Video (NASDAQ: AMZN) is another alternative to Netflix stock. The online retailer and streaming giant offer access to a wide range of movies and TV shows and its original programming. Amazon Video is available through the company's Prime subscription service, which makes shares of Amazon stock an attractive option for those looking to invest in streaming content. It is currently valued at $978.45 billion.
Sign Up and Get $5
- Sign up, add at least $5 to your account and get a $5 bonus.
- Invest with fractional shares
- Get portfolio recommendations
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- Hulu is a subscription-based streaming service that offers a variety of TV shows, movies, and original content. Hulu is owned by Disney, making it an interesting option for those looking to invest in streaming content. Though it is not publicly traded, you can indirectly invest in it through Disney (NYSE: DIS) and Comcast (NASDAQ: CMCSA).
Interested in Hulu? Check out the article on How to buy Hulu stock.
Bottom Line
Before investing in any stock, it's smart to research the company to see if it's a good fit for your portfolio. After that, it's just a matter of finding the right brokerage for your needs.
Remember to review your investments to see how they're performing regularly and if you need to make any adjustments to your portfolio.
References
- ^ Netflix, Shareholder Letter First Quarter 2023, Retrieved 05/05/2023
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Paid non-client endorsement. See Apple App Store and Google Play reviews. View important disclosures. Investment advisory services offered by Stash Investments LLC, an SEC-registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.
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