Netflix is a popular streaming service that has over 220 million subscribers in more than 190 countries. The company has become highly successful and has attracted the attention of the stock market, boasting a market capitalization of $148.11 billion as of May 17, 2023.
If you are interested in investing in Netflix, there are two main ways to do so: you can buy the stock directly or invest in ETFs. This guide will provide you with all the information you need to get started.
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How to Buy Netflix Stock
1. Research Brokerage Options
The first step to investing in Netflix is to find a brokerage. Brokers act as the intermediary between you and the stock market. They execute your trades, buying and selling stock on your behalf. Choosing the right broker is important to ensure you can invest for both long and short-term goals. There are a wide range of brokerage options available, including full-service brokers and robo-advisors.
When looking for a broker, look for one that offers low fees and investment minimums. If you’re just starting with investing, it’s better to choose a broker with low investment minimums, so you can start investing with a smaller amount of money. Additionally, some brokers may offer retirement accounts, 529 plans to save for college, and taxable brokerage accounts.
2. Do Your Homework
Before investing your money in Netflix or any other stock, you need to do your homework. If you’re going to buy stock, you should know about the company’s fundamentals and ensure it has a business model you think can succeed.
Like all publicly-traded companies, Netflix is required to file financial statements with the U.S. Securities and Exchange Commission (SEC). You can view its annual reports and quarterly financial statements on its investor relations site. By reviewing these documents, you can analyze Netflix’s financial performance, which can help you make a more informed investment decision.
Some factors to keep in mind when reviewing Netflix’s financial statements include its stock price fluctuations, competition, and its ability to produce original content. It’s also a good idea to compare Netflix’s financial performance with that of other companies in its industry.
3. Buy Netflix Stock
Once you’ve researched Netflix and are ready to invest, it’s time to buy Netflix stock. You can buy the stock on a trading platform of your choice, such as Robinhood, E*TRADE, or Charles Schwab. Enter Netflix’s ticker symbol, NFLX, and the number of shares you want to purchase.
If you’re using fractional share investing, you can enter the dollar amount you want to invest in Netflix instead. Fractional shares allow investors to buy a portion of a single stock, which is ideal for those who don’t have enough money to buy a full share.
When you purchase Netflix stock, you can choose to place the order as a limit order or a market order. A market order is processed immediately at the current price, while a limit order is only processed when the stock reaches a price you set. Limit orders can be a good choice if you expect the price to drop in the near future.
4. Monitor Your Investment
If you’re thinking about holding your Netflix stock for the long haul, it’s still a smart move to check in on how it’s doing from time to time. A simple way to do this is by comparing its progress with a popular stock market index like the S&P 500.
Keeping an eye on your investment allows you to make any necessary changes based on market shifts or your personal financial goals. For instance, if the value of your Netflix stock goes up or down dramatically, it might be a good idea to reassess your investment strategy.
To make things even easier, consider using an investment portfolio app. These handy tools let you manage all of your accounts in one place, track your portfolio’s performance, and analyze factors like risk and diversification.
5. Sell Your Shares
When you decide to sell your Netflix shares, you can do so by entering your broker’s platform and typing in the ticker symbol and the amount you want to sell. You can sell at the current market price or set an order to sell only when the stock reaches a certain price.
It’s important to keep in mind that if your investment earns a profit, you may owe capital gains taxes. Consult with a tax professional to plan for those taxes before placing any sale orders.
Consider Index Funds or ETFs
Investing in individual stocks like Netflix can be risky due to the volatile nature of the market. Index funds or exchange-traded funds (ETFs) offer a diversified portfolio, which can provide a safer investment option. These funds invest in hundreds or even thousands of companies at once, giving you exposure to a broad range of the market.
If you’re looking to invest in Netflix through index funds or ETFs, over 250 ETFs have Netflix as one of their holdings. One of Netflix’s biggest holders is the Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100.
Other options include the Fidelity MSCI Communication Services Index ETF (FCOM) or the Simplify Volt Pop Culture Disruption (VPOP) fund, which invests in companies that disrupt and innovate the entertainment industry.
Should You Invest in Netflix?
Investing in Netflix, like any investment, comes with its share of risks. The stock market can be unpredictable, and the value of your investment might rise or fall. Furthermore, the streaming industry is getting more competitive as big players like Disney, Amazon, and Apple join the fray. To stay on top, Netflix must consistently create top-notch content.
Before investing, make sure you’re aware of the potential risks and only put in money you can afford to lose.
Talking to a financial advisor before making any investment decisions is a smart move to get a well-rounded understanding of the risks involved.
- Learn more about how Netflix makes money.
The Bottom Line
Investing in Netflix is an exhilarating way to participate in the streaming revolution. To begin, explore various brokerages, thoroughly research Netflix, purchase the stock, and monitor your investment closely.
Moreover, you might consider investigating index funds or ETFs associated with the streaming industry. However, it is essential to be aware of the risks involved and to consult with a financial advisor or tax expert before making any decisions.