Have you always wanted to invest in Netflix stock but don’t know where to start or how to go about it? Today’s guide will provide you with all the details on how you can seamlessly invest in Netflix shares.
Netflix has performed superbly despite falling sharply during the coronavirus pandemic. Its recovery rate has made it appealing to many investors looking to add the company’s shares to their investment portfolio.
Today’s guide will give you an overview of the company, how it has performed over the years, and tips on how you can easily buy some of the company shares. We will also show you how you can buy Netflix shares on popular brokers like eToro. Let’s start with an overview of Netflix.
About Netflix
Netflix is among the leading movie streaming platforms out there. Since it launched several years ago, it has revolutionized how people watch and keep up with their favorite movies and TV shows. Given its overwhelming success, Netflix applied to be a publicly traded company, finally making it possible for people to invest in the company.
Besides being traded on NASDAQ under the NFLX ticker, Netflix can be bought, sold and traded on popular brokerage platforms like eToro, Plus500, Admiral Markets, Fidelity and more.
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Trading with financial instruments carries high level of risks that is not suitable for all investors. Before making any investment decisions, you should seek advice from independent financial advisor to ensure you understand the risks involved.
Trading with financial instruments carries high level of risks that is not suitable for all investors. Before making any investment decisions, you should seek advice from independent financial advisor to ensure you understand the risks involved.
If you’re looking to buy Netflix stocks, you first need to find a broker that has listed them on its platform.
How have Netflix shares performed?
Before putting your money into any company’s shares, it’s important to focus on how the company has been performing. This will help you decide whether investing in the company is worth it.
In terms of performance, Netflix has continued to wow investors as the company’s shares have continued to edge higher in value. Netflix stock has increased significantly by over 21% in the last three months, which is just mind blowing.
When investing in a company’s share, you want to focus on a company’s key performance indicators. This clearly shows you what could be influencing a company’s share. In Netflix’s case, we would like to focus on Netflix’s ROE.
Return on equity is an important factor you want to focus on as a shareholder, and that’s because it gives a clear picture of how effectively the company is reinvesting your capital. Without mincing words, return on equity shows the profit each dollar generates with respect to shareholders’ investment.
ROE can be calculated using this formula: Return on Equity= Net Profit ÷ by Shareholder equity.
Considering the above formula, the Return on Equity for Netflix is:
27%=$5.1b ÷ $19b (as per the available stats for 12 months)
The “return” relates to the company’s income over the last year. This simply means that for every $1 of investors’ capital, Netflix generated $0.27 profit, which is simply astonishing.
Overall, Netflix has performed quite superbly in recent times. And yes, it’s good to see the company investing heavily in its business. This has resulted in significant growth in earnings. But despite its robust performance this year, experts expect the company’s earnings growth to slow down a bit due to rising inflation.
How to buy Netflix stock
Having given you an overview of Netflix and how the company has performed recently, it’s time to jump into the part you have been waiting for: how to buy Netflix stock online. Surprisingly, the process is super easy. Let’s jump right in, shall we?
Step 1: Choose a Brokerage
To invest in Netflix shares or any other stock, you’ll need to register with a brokerage. For times immemorial, brokers have continued to serve as intermediaries between yourself and the stock market. Brokerage firms help you execute your trades, whether buying or selling. With brokers, you have the option to invest for long-term goals such as retirement or aim for a quick profit.
Speaking about brokers, there is a wide selection of brokers available out there you can confidently do business with. That said, when choosing a broker, you want to end up with one that offers low fees and investment minimums. With such a broker, you can start investing right away.
While there are many brokers out there, one we highly recommend is eToro, which is because of its unique proposition.
Step 2: Open an Account
Once you have made up your mind on the broker to use, the next thing you want to do is open an account. Keep in mind that brokers usually offer different account options, so make sure you know exactly what you are looking for. Some of the leading brokers we have explored offer several account options, including retirement accounts, 529 plans, which is great for saving for college and taxable brokerage accounts. Let’s look closely at each account type.
- Retirement accounts: Opening an individual retirement account (IRA) comes with many significant benefits, including tax advantages. Notwithstanding, IRAs have one significant limitation. If you decide to withdraw your money before you are at least 59½, you’ll incur a 10% penalty fee along with income taxes.
- Taxable accounts: Although taxable brokerage accounts may not come with any tax benefits, they have their unique advantages. To start with, having this type of account means you can withdraw your funds anytime without incurring any type of penalty. So if you want some flexibility with your investment, it’s best to open a taxable account.
Step 3: Research Netflix
Before putting your hard-earned money into Netflix or any other company’s stock, it’s important you do your due diligence. If you want to buy Netflix stock, it’s important you know a thing or two about the company’s fundamentals. You also want to make sure that the company has a business model that will succeed.
Like all publicly traded companies, Netflix is required to file its financial statements with the U.S Securities and Exchange Commission (SEC). To view Netflix’s annual reports and quarterly financial statements, you can visit its investor relations sites.
When perusing these documents, you want to focus on these factors. This will help you decide how much money to invest in Netflix stock.
Volatility: Netflix’s stock value has fluctuated significantly in the last couple of years. In 2021, the company’s stock price reached as high as $682. But in March 2022, it fell to as low as $330. In its annual report, the company cautioned that the volatility of its stock is due to factors beyond its control.
Price per share: Netflix shares aren’t as expensive on a per-share basis, especially compared to other high-flying tech stocks. More so, some brokers allow investors to purchase fractional shares. This simply means that you can buy bits of a single stock instead of investing large sums into buying a single stock of a company. With brokers like eToro that support fractional shares, you can adopt strategies like dollar cost averaging to grow your investment.
Competition: At some point, Netflix used to be the only streaming video service provider out there. But today, things have changed significantly as Netflix is facing stiff competition from other new players. For instance, shows like Parks and Recreation and The Office have been pulled off Netflix and listed on Peacock. Also, Disney took down nearly all its Marvel movies and shows after it launched Disney+. Competitors like this have forced Netflix to invest in its own original content.
Note: All these factors listed above play a significant role in influencing Netflix’s value.
Step 4: Place an Order
If you decide to buy Netflix stock, all you need to do is open your trading account and enter Netflix’s ticker symbol, NFLX. After that, you’ll need to choose how many shares you wish to purchase. If your broker supports fractional share investment, you can enter the dollar amount you would like to invest instead.
When buying Netflix shares, you can use either a limit order or a market order. If you opt for market orders, your trade will be executed as per the current value of Netflix stock. On the flip side, if you opt for a limit order, your broker will only execute your trade if the price reaches the price you set. Usually, limit orders are great if you expect the price of Netflix shares to drop sometime in the near future.
Step 5 Monitor NFLX’s Performance
Even if your plan is to hold Netflix stock for the long term, it’s always a brilliant move as an investor to review the performance of your stock from time to time. You can always compare its performance to popular stock indexes like S&P 500. This way, you know how it is measuring up.
If you have multiple investment accounts with different brokerages, you can always use an investment portfolio app to keep track of your investment from one place.
Step 6: Have an exit plan
Whether you intend to hold onto your Netflix shares for a few years or a few decades, there will come a time when you decide to sell your shares.
As with purchasing stock, you can sell your shares by entering your broker’s platform and typing in the ticker symbol and the amount you want to sell. You can sell at its current price, or you can place an order to sell only when the stock reaches a certain price.
If your investment earns a profit, you may owe capital gains taxes, so consider talking with a tax professional about how to plan for those taxes before placing any sale orders.
How to buy Netflix stock on eToro
Now that you know how to invest in Netflix stock, we want to use this opportunity to show you how you can buy Netflix shares on an exchange like eToro. And just so you know, the process is pretty straightforward and only takes a couple of minutes. Here, check out how anyone can buy Netflix stock on eToro.
Create an eToro account
If you don’t already have an account with eToro, you’d have to open one to be able to buy Netflix stock. As we reiterated earlier, the process is simple. If you already have an account with eToro, you can simply log in.
During the signup process, you’ll be required to provide basic information like name, email address, and phone number. Nonetheless, to fund your eToro trading account, you’ll need to provide additional info so the broker can verify your identity.
Complete your eToro profile
If you’re opening your account for the first time on eToro, you’d be required to complete your profile. For customers who have an existing account, you can skip this process. Completing your profile only takes a couple of minutes and is a requirement by most brokers as per AML and CTF regulations. With your profile now complete, you can proceed to other aspects.
Fund your trading account
After completing your eToro profile, you’ll need to fund your trading account to be able to buy some Netflix Stocks. We love eToro because they have a low minimum deposit requirement. To start trading on the eToro platform, you’ll need to make a minimum deposit of $200 or it’s equivalent in other currencies.
And just to add, eToro supports up to 8 popular deposit methods, including PayPal, wire transfer, UnionPay, credit or debit cards, Neteller, Skrill, and WebMoney. So, funding your account is super easy.
Tip: If you’re not fully convinced or you don’t feel ready to invest real money, you can test the waters with eToro’s virtual portfolio feature. This option lets you trade your favorite stocks without putting in real money. And as you gain experience and feel more comfortable, you can switch to a real portfolio.
Buy Netflix Stock
With your eToro account now funded, you can proceed to buy Netflix stocks. While eToro lets you buy Netflix shares seamlessly, you can also decide to short it. Keep in mind that the direction you decide to take is based on current market sentiments or direction. Here is how you can buy Netflix stock on eToro.
Navigate to eToro’s unique search bar, which sits at the top of the screen. Enter the ticker name associated with Netflix stocks: NFLX. Hit the trade now button to place your order. A new window should pop up, allowing you to make changes to different parameters. It’s that easy.
