How To Buy Netflix Stock
Welcome to Trading Brokers step by step guide to buying Netflix stock. Here you will find an easy to understand explanation of trading Netflix stock. This includes how to buy Netflix shares online, what you need to trade Netflix stock and how to open a trading account with a stock broker so that you can buy Netflix stock online today.
Maybe you have heard of buying Netflix stock online or through a friend. Perhaps you are looking to trade and are curious about the different options available to you. Whether you are looking to speculate, invest or just learn more, this guide on how to buy Netflix stock can help you along your journey.
Overview of Netflix
Netflix, Inc. is an American technology and entertainment company, providing video-on-demand and media streaming services. In 1997, Reed Hastings and Marc Randolph founded Netflix in California, U.S. The company generates maximum revenue from subscription payments, with over 190 million subscribers worldwide as of April 2020. Moreover, Netflix also generates additional revenue from the DVD rentals business, which it runs through its subsidiary, dvd.com. It has expanded its operations worldwide, with North Korea, mainland China, Crimea, and Syria being the exceptions.
The company’s headquarters are located in Los Gatos, California, U.S. Besides, the company operates several production hubs: two in the U.S, and one each in the UK and Spain. Netflix competitors are Hulu, Amazon Prime Video, Disney+, YouTube TV, etc.
Netflix Inc. Stock
Netflix is listed on NASDAQ and has a ticker symbol of NFLX. Its stock is a component of NASDAQ 100, S&P 100, and S&P 500 indices. Netflix conducted its IPO on May 23, 2002, with an offering price of $15 per share. The stock price touched $500 on November 04, 2020.
What moves the stock price of Netflix?
Netflix, like any other stock, moves in reaction to many factors. Many positive developments have taken the price of Netflix stock from $15 per share in 2002 to $500 in November 2020. Early investors of the stock would have seen their investments increase 33 times, which signifies the importance of analyzing stocks to predict their movements.
Market conditions and competitors
To predict the movement in Netflix stock, investors should closely monitor the online-streaming market situation. Various competitors are there in the market, with each competitor vying desperately for increasing their market shares. With so many players in the market, the market is becoming saturated and, therefore, unless the players don’t show an increase in the number of subscribers, the stock price might not move higher or might decrease instead.
Analysis of key metrics like Average Revenue Per User (ARPU) and market share percentage might prove helpful. Therefore, an investor must analyze the market conditions and the competitive position of Netflix before investing in it. If the metrics and market share position of Netflix improves in comparison to its competitors, the stock might move upwards and vice versa.
Innovations and new initiatives
Any new innovations that can give Netflix a competitive advantage and contribute positively to its revenues can increase its stock price. New partnerships with production houses or a breakthrough feature can also prove instrumental in higher stock prices.
Earnings reports contain important metrics and statistics that can be extremely helpful in gauging the direction of the stock. Poor metrics, combined with underwhelming earnings, can dampen the investors’ sentiments and result in a plummet in the share price. Conversely, encouraging earnings, coupled with good metrics, can rally the stock price.
An investor can use different financial ratios to gauge the health of the company and determine whether the stock is overvalued or undervalued. Some common ratios investors use are P/E (Price-to-earnings) ratio, profitability ratios, debt ratios, etc. A higher P/E ratio of Netflix, as compared to the competitor or the industry average, is often a sign of an overvalued stock and vice versa.
An investor should exercise caution when the values of the financial ratios differ too much from the industry average. Before investing, the investor should identify reasons that have caused the huge difference between the values of financial ratios of the company and those of the industry.
Support and Resistance areas in Technical Analysis
Other than the factors mentioned above, Netflix stock can also move because of the various important areas in the pricing chart. When the market is quiet and there is a lack of triggers in the stock market, the stock often moves in a pattern visible on the pricing chart. Every stock, including Netflix, has certain important areas called support and resistance points on the pricing chart. When the price of the stock reaches the support area, the price stops falling. Conversely, when the stock price reaches a resistance level, the price stops going higher at that point. You can see these points in pricing charts.
Therefore, the stock price of Netflix can move in reaction to pricing charts as well.
While many factors can influence the movement of Netflix stock price, the above-mentioned points are some of the most critical points investors should keep in mind to predict possible movements in Netflix stock.
Investing in Netflix
Investing in Netflix stock is when you buy Netflix shares to own them outright, usually with a view to holding them for the long term. Investors would usually look to buy Netflix stock in order to try and make a profit when the Netflix stock price increases in value.
Trading Netflix stock
Trading Netflix stock is when a trader speculates on the movement in the Netflix stock price without actually owning the shares in Netflix. Traders tend to buy and sell Netflix stock on a more frequent basis, usually speculating on daily, weekly or monthly price fluctuations.
You can buy and sell Netflix stock online through various methods including spot markets, futures contracts, options contracts, spread bets, CFDs (contracts for differences) and ETFs (exchange-traded funds).
One of the most popular ways to trade Netflix stock is via CFDs (contracts for differences). When trading Netflix CFDs, you do not actually invest in Netflix shares, meaning you are not tied to them. You are only speculating on the rise or fall of the Netflix stock price. A CFD is a financial contract, typically between a broker and a trader, where one party agrees to pay the other the difference in the value of a security, between the opening and closing of the trade.
A CFD trader can go short or long, set stop and limit losses and apply trading scenarios that align with their own personal objectives. Traders would open long (buy) positions, if they think the stock price of Netflix will rise or short (sell) positions if they thought that the Netflix stock price will fall. The difference in price between the entry and exit price is the traders realised profit or loss, excluding any broker commission and fees.
For example, if you think Netflix shares are going to increase in price, you could buy a share CFD on the company. You will exchange the difference in price between when your position is opened and when it is closed, earning a profit if the shares increase in price and making a loss if they decrease in price.
On the contrary, if you think Netflix shares are going to decrease in price, you could sell a share CFD on the company. You will still exchange the difference in price between when your position is opened and when it is closed, earning a profit if the shares decrease in price and making a loss if they increase in price.
Futures contracts are an agreement to buy or sell a specified asset at a certain date and price. Netflix investors can use futures trading to speculate on the price movement of Netflix stock in order to try and make a profit. Traders would look to go long (buy) a futures contract if they believe the price will rise or short (sell) a futures contract if they believe the price will fall. The difference in price between the price at the start and expiry date of the futures contract is the profit or loss from the contract.
Netflix spread betting
Spread betting is a financial derivative that enables traders to speculate on Netflix stock falling or rising without taking ownership of the underlying asset. If the trader makes a correct prediction and the asset does move in that direction, they could make a profit, minus any broker fees. On the other hand, if the price moves against their prediction, they would incur a loss.
Financial spread betting is similar in ways to CFD trading except that you are betting a fixed amount per point on the Netflix stock price movement (either up or down) and then pay or receive the difference between the opening and closing price of the bet.
Netflix options are financial instruments that are derivatives based on the value of Netflix’s stock. Traders usually enter into calls when they expect the price of the underlying asset to increase, and puts when they expect the price to decrease. Option contracts come with an expiration date before which the holder needs to exercise their option to buy or sell an underlying asset at an agreed-upon price. The stated price on an option is known as the strike price.
Buyers can choose to exercise their calls and puts or not whereas sellers are obligated according to the buyer decision. Therefore, the sellers (writers) can be exposed to more risk than buyers whose losses can be limited to the premium paid for the contract in the instance they do not exercise the contract. On the other hand, sellers could lose more depending on the Netflix market price.
Exchange Traded Funds (ETFs) enable traders to invest in a basket of securities that trade intraday like individual stocks on an exchange, and are typically designed to track the performance of an existing market or group of markets.
Each ETF is usually focused on a specific sector, asset class, or category. ETFs can be commonly used to help diversify an investment portfolio and create a mini-portfolio, or, for the active trader, they can be used to try and take advantage of price movements.
Netflix is included in various ETF’s with shares in the U.S. ETF market. Traders who are interested in trading other companies alongside Netflix, may consider ETFs.
Where to buy Netflix stock?
Stock trades are processed via a stock exchange, where a stock broker represents each investor. The majority of investors will nowadays use an online stock broker to buy and sell stocks through a stock trading platform which will enable them to connect to the stock exchange. You can see a selection of our best stock brokers below with whom you can open an account to trade stocks online.
ASIC, BVI, CBI, FFAJ, FSA, FSCA
Min $100 Deposit
FCA, CFTC, NFA, BaFin, FINMA, ASIC, FMA, MAS, FSA, FSCA, DFSA, JFSA, METI, MAFF
Min $250 Deposit
ASIC, FCA, DFSA, SCB, CySEC, BaFin, CMA
Min $200 Deposit
ASIC, CySEC, IFSC, DFSA
Min $5 Deposit
Why trade Netflix stock?
Trading the stock market has become a popular investment activity for many people, especially with the technology that we have these days making it more accessible than ever. There are a vast number of trading brokers, trading platforms and trading apps available for buying and selling Netflix stock with relative ease. The cost involved to get started makes trading Netflix stock accessible to traders of all experience levels from across the globe.
The availability of leverage has also contributed towards the increase in aspiring traders. Leverage allows traders to hold a position size greater than they would have been able to without it. E.g. An account balance of $1,000, could take a position size of $5,000 with 1:5 leverage. Whilst this can increase potential profits, it also greatly increases risk. It is therefore of the upmost importance that you have a clear understanding of the significant risks involved with online trading, especially when using leveraged positions.
The majority of traders would look to buy and sell Netflix stock to try and earn profit from the variation in Netflix’s stock price. When trading Netflix CFDs you can speculate long and short on prices rising or falling without actually needing to invest in Netflix shares. This can make it a more convenient trading method for anyone who has a trading account with an online broker. Alternatively, long term investors may purchase traditional shares in Netflix’s stock for a more long-term hold.
Buying Netflix stock can also be a way to diversify a trading portfolio and to hedge against shares in other stocks or investments in other asset classes such as forex, commodities, precious metals and cryptocurrencies.
However, before investing in Netflix, it is important you understand the dynamics that affect the Netflix stock price.
How to trade Netflix stock online?
If you have taken the time to read through the above, you should hopefully have an understanding of how to trade Netflix stock online. Here is a summary of the key steps:
1. Decide if trading Netflix stock is for you
Trading Netflix stock online carries an element of risk and can take more time than other forms of investing. You will need to research the company, manage your positions, follow market news and decide how to react to it. It is important to understand the risks and dedication that comes with trading Netflix stock online.
2. Educate yourself
Before trading Netflix stock, it is imperative to learn as much as possible about investing and trading online. Any mistake could prove to be costly. There is an abundance of free educational materials provided by many online brokers that can help you to improve your trading skills and knowledge.
Most brokerages will also provide a free demo trading account so that you can practice trading Netflix stock online with virtual funds in order to familiarise yourself with the trading platforms and practice your trading strategies until you feel confident enough to open a real trading account.
3. Choose a Netflix stock broker
In order to trade Netflix stock online, you will need a broker account and trading platform to execute your trade positions through to the market. When choosing a broker, there are a few important things to consider such as regulation, commission fees, platforms, tools, education, funding options and customer support.
If you do not have the time to research brokers, you can see a list of our best brokers that we have already prepared to help traders. If you would like to know more, you can also view our detailed guide on how to choose a trading broker.
4. Research Netflix
If you have made it this far then you may be ready to start trading Netflix stock online! The next step is to research Netflix to help increase your knowledge in the company. The best brokers should have this information conveniently displayed for you within their trading platform.
5. Have a trading plan
Some of the most important factors that can help determine Netflix stock trading performance can be the trading plan and discipline. It is important to have a solid trading plan personalised to your own needs that includes the money management and trading strategy that you will use. Most experts and professional traders would try to not let negative emotions such as fear, anger and greed affect their trading strategy.
6. Buy and sell Netflix stock
Once you feel ready to trade Netflix stock online, you can analyse the market to help decide if and when you will place your trades. After placing a trade on Netflix, you will need to keep track of how it performs and manage it according to your trading plan. Some investors will keep hold of Netflix trades for the long-term, whereas traders may buy and sell Netflix stock on a daily basis.
Is trading Netflix stock right for me?
Trading Netflix stock is a popular choice for long-term investors and active traders. It can be suitable for scalping, day trading and swing trading. Traders who would usually trade forex, trade indices, trade commodities, trade cryptocurrency, may look to diversify their portfolio.
However, it is important to understand the significant risks involved with trading Netflix stock online, especially when using leveraged positions. Most experts would suggest trading on a demo account with virtual funds to begin with.
This can be a useful way to familiarise yourself with how to trade Netflix stock and using trading platforms whilst allowing you to practice your trading strategies until you feel confident and produce consistent results. Most stock brokers provide unlimited demo accounts free of charge.
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