How to Buy NFLX – Forbes Advisor
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Whether you’re obsessed with the latest show or just love the movies, there’s no denying that Netflix has revolutionized the way we watch TV.
Today, Netflix has over 222 million paying members in 190 countries. Since its initial public offering (IPO) in 2002, NFLX’s stock price has skyrocketed. Consider this: Netflix had a market capitalization of around $3 billion in January 2010, up from $150 billion today.
How to Buy Netflix Stock (NFLX)
1. Choose a brokerage
To invest in Netflix or any other stock, you need a brokerage. Brokers are the intermediary between you and the stock market, meaning they execute your trades, buy and sell stocks. You can use a broker to invest for long-term goals, like retirement, or aim for short-term profits.
There is a wide range of brokerage options available, including full-service brokerages and robo-advisors. In general, look for a broker that offers low fees and investment minimums so you can start investing right away. You can use our picks for the best investing apps and the best online brokers to kick off your search.
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2. Open an account
Depending on the brokerage you choose, you may have several different account options. Brokers may offer retirement accounts, 529 college savings plans, and taxable brokerage accounts.
- Retirement accounts. If you choose to open an Individual Retirement Account (IRA), you may enjoy tax advantages when saving for retirement. But IRAs have one big limitation: Withdraw money before you’re at least 59½, and you’ll have to pay a 10% penalty, plus income taxes.
- Taxable Accounts. Taxable brokerage accounts may not offer tax advantages, they do have certain advantages. You can withdraw funds at any time, for any reason, giving you flexibility when it comes to accessing the proceeds of your investment.
3. Research Netflix
Before investing your money in Netflix or any other stock, you need to do your homework. If you are considering buying stocks, you need to know the fundamentals of the company and make sure it has a business model that you believe can be successful.
Like all publicly traded companies, Netflix is required to file financial statements with the United States Securities and Exchange Commission (SEC). You can view his Annual Report and quarterly financial statements on its investor relations site.
When reviewing these documents, keep the following factors in mind to help you decide how much to invest:
- Volatility: The Netflix stock price has fluctuated a lot in recent years. In 2021, its price reached $682. In March 2022, it dropped to around $330. In Netflix’s annual report, it warns that its price continues to be volatile due to factors beyond its control.
- Price per share: NFLX is not as expensive per share as some high-flying tech stocks. Some brokers allow investors to buy fractional shares, i.e. the ability to buy a proportionate share of a single stock, but others require you to invest enough money to buy a whole action. If this is the case, using a strategy such as cost averaging may be more difficult, as you will need to save a large amount of money before you can buy a stock.
- Competetion: Once upon a time, it was pretty much the only streaming video service, but today Netflix is facing fierce competition in the streaming space. For example, NBC pulled episodes of The Office and Parks and Recreation from Netflix when it launched Peacock, and Disney pulled its Marvel movies and shows when it launched Disney+. Competitors like this force the company to spend even more to produce original content.
4. Place an order
If you decide to buy Netflix shares, open your trading platform of choice and enter Netflix’s ticker symbol – NFLX – and the number of shares you wish to buy. If you’re using an investing app that offers fractional stock investing, you can enter the dollar amount you want to invest in Netflix instead.
You can usually choose to place the order as a limit order or a market order. Market orders, when placed during normal trading hours, are processed immediately at the current price. By contrast, limit orders are only processed when the stock reaches a price you set and can be a good choice if you expect the price to drop in the near future.
Netflix is listed on the Nasdaq stock exchange, the second largest stock exchange in the world. Nasdaq trading hours are Monday through Friday, 9:30 a.m. to 4:00 p.m. ET. The Nasdaq has trading before and after hours beyond its core hours.
5. Monitor NFLX Performance
Even if you plan to hold your Netflix stock for the long term, it’s a good idea to periodically review the performance of your investment. You can compare its performance to that of a stock index like the S&P 500 to see how it measures up.
If you have multiple investment accounts with different brokers, you can use an investment portfolio app to manage all of your accounts in one place.
6. Have an exit plan
Whether you intend to hold your Netflix shares for a few years or a few decades, there will come a time when you decide to sell your shares.
Similar to buying stocks, you can sell your stocks by going to your broker’s platform and typing in the stock symbol and the amount you want to sell. You can sell at its current price or place a sell order only when the stock reaches a certain price.
If your investment generates a profit, you may owe capital gains taxes, so consider talking to a tax professional about how to plan for these taxes before placing sell orders.
Other ways to invest in Netflix
Netflix’s performance over the past 10 years has been volatile. While it has seen incredible growth for several years, its price has dropped by 25% in the past 12 months.
With this volatility in mind, you may want to consider investing in index funds or exchange-traded funds (ETFs) rather than individual stocks. These funds invest in hundreds or even thousands of companies at once, giving you a diversified portfolio ready to go.
As a large company, there are many funds that can give you exposure to Netflix. More than 250 ETFs have Netflix among their holdings. One of Netflix’s largest holders is the Invesco QQQ Trust (QQQ), a fund that tracks the Nasdaq 100.
If you’re looking for a more specialized fund, other options include the Fidelity MSCI Communication Services Index ETF (FCOM) or the Simplify Volt Pop Culture Disruption (VPOP) fund.