Investors who want to buy Netflix stock should follow a few steps before hitting the button. Here is how to buy Netflix shares either as a short-term active trader or long-term investor.
What is Netflix
Netflix was founded in 1997 in California started as a rental and selling place of DVDs by mail, but soon, the sales were eliminated to focus on the DVD rental business. Currently, Netflix is a media service and original programming production company that offers subscription-based video on demand.
Headquartered in Los Gatos, California, Netflix is available globally, except mainland China, Syria, North Korea, and Crimea – due to local and U.S. sanctions, respectively.
The firm provides a subscription service streaming movies and television episodes over the Internet and sending DVDs by mail. It operates through the following segments: Domestic Streaming, International Streaming, and Domestic DVD. The Domestic Streaming segment derives revenues from monthly membership fees for services consisting of streaming content to its members in the United States. The International Streaming segment includes fees from members outside the United States. The Domestic DVD segment covers revenues from services consisting of DVD-by-mail.
In 2021, the streaming entertainment giant was named the 8th most trusted brand globally by Morning Consult. Also, Netflix is the largest media & entertainment company by market capitalization.
Netflix is a publicly traded company, making its stock available to anyone of legal age interested in purchasing shares.
What are Netflix Shares (NFLX)
Netflix shares represent a unit of ownership in Netflix Inc. – and they are among the world’s most popular financial instruments. Netflix shares will rise and fall in value according to how well the company is performing at a given moment in time. Better-than-expected earnings will make Netflix share prices rise, while weaker earnings will make share prices fall. However, there are many reasons why a company's share price can change.
People trade Netflix shares because, just like other financial instruments, they can be an opportunity to invest money. At a basic level, you can take a position on Netflix shares to get exposure to economic growth. If an economy is in good shape, you might find that companies operating in that specific economic branch or industry will grow too.
Company growth is correlated with share price increases, which is what people are hoping for when they buy Netflix shares.
On May 23, 2002, Netflix's stock began trading on the Nasdaq. Its stock was first sold at an initial public offering (IPO) price of $15 per share.
Since its IPO in 2002, Netflix has split its stock twice. The first was a 2-for-1 stock split that occurred in 2004. The second was a 7-for-1 stock split in 2015. Thus, if you had purchased one share of Netflix's stock on the day of its IPO and held it until now, you would have 14 shares today that value $1400.
In the past decade, Netflix was the top-performing stock of the S&P 500 index, having a return of 3.693% according to CNBC calculations. S&P 500 index would have seen a 356.8% return over the same time period.
Netflix stock is traded on the Nasdaq stock exchange under the NFLX ticker.
If all that makes you want in on Netflix’s streaming entertainment growth, here is everything you need to know to buy Netflix stock & shares to invest in NFLX.
How to Buy Netflix Shares
Learning how to buy shares may not sound complicated, but you will need to do some research — and learn the basics — before making your first investment.
- Learn the difference between investing and trading
- Review Netflix’s performance and outlook 2022
- Understand the risks and charges
- Access the trading platform and place your orders
- Stay up to date with the latest news and rumors about Netflix
1. Learn the difference between investing and trading
People have two options to buy shares of stock online. Firstly, they can buy shares in companies on the exchanges where they are listed. For instance, you can buy Netflix stock on the NASDAQ exchange, so you own a share in the company (investor). Alternatively, they can buy Netflix shares without owning them, speculating on the price of the underlying asset (trader).
Investing and trading are similar terms that some people will sometimes use interchangeably – but there are significant differences for you to be aware of.
Investing in Netflix Stock
Investors buy Netflix shares hoping their price will rise and they can sell them later for a profit, adhering to the basic principle of buying low and selling high. Investors will take positions over a longer period, attempting to profit from share price changes as well as dividend payments.
While this means that they might need more initial capital to get started when compared to trading, their losses would be capped at this initial price tag. That said, investors should be aware they might get back less returns than they initially invested.
Investors will buy Netflix shares to:
- Make a profit from the Netflix share price rising
- Receive an income from dividends if the company pays them
- Benefit from the effects of compounding
This last point requires investors to hold onto their shares for an extended period. That’s why you’ll sometimes hear the phrase ”time in the markets is better than timing the markets” when talking about share investments.
>> Learn how to invest in stocks for beginners
Netflix (or any single stock, for that matter) can be a very volatile investment. You can lower the risk by diversifying your investment holdings.
An index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund provides a broad market exposure, low operating expenses, and low portfolio turnover. These funds follow their benchmark index regardless of the state of the markets.
NFLX currently makes up about 4.59% of the S&P 500, meaning 4.59% of each dollar you invest in an S&P 500 index fund goes to Netflix. Netflix also accounts for 2% of Nasdaq 100 index.
Communication services exchange-traded funds (ETFs) provide exposure to the performance of companies within the global automobile industry.
NFLX makes up 5.5% of JHCS (John Hancock Multifactor Media and Communications ETF), 5.18% of SUBZ (Roundhill Streaming Services and Technology ETF), 5.0% of PBS (Invesco Dynamic Media ETF), 4.92% of EWCO (Invesco S&P 500 Equal Weight Communication Services ETF).
>> Learn what ETFs are and how do they work
Trading Netflix CFDs
On the other hand, traders might seek to capitalize on short-term share price gains. Rather than investing in the shares, traders speculate on the shares’ value. They can speculate on it rising by going long, as well as falling by going short.
Trading Netflix stock means that you are speculating on a share’s price movements with derivatives like CFDs. In other words, you are purchasing Netflix shares without taking direct ownership.
Leverage is available when you use this product, giving you full market exposure for an initial deposit – known as margin – to open your position.
For example, a trader who wanted to buy 100 Netflix CFDs at $638.29 per share would only require $12.765 of trading capital, thereby leaving the remaining $51.064 available for additional trades.
But keep in mind that leverage can increase both your profits and your losses as they will be based on the full exposure of the trade, not just the margin requirement needed to open it. This means losses, as well as profits, could far exceed your margin.
With CFDs, you can ‘buy’ (go long) the shares if you think the Netflix stock’s price will rise, or you can ‘sell’ (go short) if you think the Netflix stock’s price will fall.
>> Learn what is CFD trading and how it works
Going Long Netflix CFD
Netflix has a sell price of $637.74 and a buy price of $638.29.
Netflix's following earnings announcement is fast approaching, and you expect it to be good news. You think the company's share price will go up, so you buy 200 Netflix CFDs at $638.29. This is the equivalent of buying 200 Netflix shares.
Because in CFD trading, you can use leverage, you do not need to put up the full value of Netflix shares. Instead, you only need to cover the margin - calculated by multiplying your exposure with the margin factor for the market you are trading.
So, if Netflix has a margin factor of 20%, your margin would be 20% of the total exposure of your trade (200 share CFDs x $638.29 = $127.658), which is $25.531.
If your prediction is correct:
When Netflix announces its results, it is clear the company had a successful quarter – and as you had predicted, its share price climbs. You decide to close your position when it reaches $650, with a buy price of $650.20 and a selling price of $650.
You reverse your trade to close a position, so you sell your 200 CFDs for $650.
To calculate your profit, you multiply the difference between the closing price and the opening price of your position by its size. $650 – $638.29 = $11.71, which you multiply by 200 CFDs to get a profit of $2.342.
If your prediction is wrong:
Netflix's results are worse than expected, and its share price immediately falls. You decide to cut your losses and sell your 200 CFDs at $630.
Your position has moved $8.29 against you, meaning you make a loss of $1658.
Going Short Netflix CFD
Shorting with derivatives can be an effective way to protect your investments against downward price movements in your non-leveraged investment portfolio. Also, it can be a way to generate profits outright from shares that are falling in value. But when you go short, your potential losses are theoretically uncapped because there is no limit on how high a company’s share price can rise.
Here is an example:
Suppose Netflix shares are currently trading with a selling price of $640, and you think the price will go down. So, you decide to open a short CFD position on 100 Netflix shares CFD. A week later, the buy price reaches $620, and you close your position. This means you made $2.000 in profit ([640 - 620] x 100 = $2.000), excluding additional costs.
If the price rises, you register a loss. For example, if Netflix shares rose to a price of $650, you would make a $1000 loss instead, excluding additional costs.
When you create a trading account with CAPEX, you will be able to:
- ‘Buy’ (go long) or ‘sell’ (go short) Netflix and other 2,000 international shares to speculate on their price rising or falling
- Take a position on our range of ETFs to get exposure to a basket of shares from an entire country, index, or sector that could be rising or falling in price.
- Trade a host of global indices – including the S&P 500, the famous technology index NASDAQ 100, the Dow Jones Industrial Average (Wall Street), and the DAX (Germany 30) – to go long or short on the performance of an entire economy with a single trade.
- Use QuantX, the smart portfolio builder that helps you cover the popular industries and only invest in the top-performing stocks.
2. Review Netflix’s Performance and Outlook 2022
Before buying Netflix stock—or any stock (see our guide on how to buy shares)—it’s wise to do some research into the company’s financials, performance, and outlook. The easiest place to get started is through a company’s annual reports and quarterly reports. Public companies like NFLX are required to publicize detailed information about their financial health in these.
You can find these on Netflix’s investor relations site or by searching the Securities and Exchange Commission’s (SEC) database.
You may also turn to experts for their input. Brokerage companies frequently release commentary on major stocks and industries, and third-party evaluators like Trading Central provide comprehensive technical and fundamental analysis.
When you combine financial data with expert insight, you will be able to decide how much of your money you want to put into Netflix stock.
Before you load up the trunk with Netflix shares, pop opens the hood and see what you are really getting into. Remember, when you buy Netflix stock, you are purchasing a small portion of an actual business:
Netflix INC. designs, develops, manufactures, leases and sells electric vehicles, and energy generation and storage systems in the United States, China and internationally.
Netflix's balance sheet, income statement, competition, and management (all explained in our guide on how to research stocks) will help you give the company a good once-over.
You can access research, analyst ratings, and other key information about Netflix via your brokerage account or a financial information website. If you like what you see, your next step is to consider whether Netflix fits into your current investment portfolio.
- Netflix's market capitalization is $300.7 B
- Netflix's upward movement is 39% in 1 year
- Earnings per share (EPS) were up 80% over the past year and are forecast to grow by 22.62% per year.
The company reported a strong third quarter with improved earning revenues and profit margins.
- Revenue: $7.48b (up 16% from 3Q 2020).
- Net income: $1.45b (up 83% from 3Q 2020).
- Profit margin: 19% (up from 12% in 3Q 2020). The increase in margin was driven by higher revenue.
Over the last 3 years on average, earnings per share (EPS) has increased by 124% per year but the company’s share price has increased by 142% per year, which means it is tracking significantly ahead of earnings growth.
The price-to-earnings ratio (PER) is 59.5. Fair value according to valuation is around 798.23$, which means Netflix's stock price is 15% undervalued.
*Last update: November 2021. Source: Yahoo Finance
Netflix (NASDAQ: NFLX) does not pay a dividend.
Netflix Chart Price
Technical traders analyze price charts to attempt to predict price movement. The two primary variables for technical analysis are the time frames considered and the technical indicators that a trader chooses to utilize.
Our web-trading platform, for example, offers 6 chart types (including the famous Japanese candlestick chart) to help you analyze price performance across different timeframes. It also enables you to deal in an instant – directly from the charts. You will be able to open, close and edit positions in just a couple of clicks.
Trading charts always feature distinct patterns that technical analysts can use to interpret the behavior of buyers and sellers. These chart patterns can give traders an indication of where the market could go next. As you will notice when you look at a chart, the market will usually move in one overall direction or trend. There are three types of market trends: uptrends, downtrends, and sideways trends.
Technically, after a period of more than a year of sideways movement, the share price shot up towards new all-time highs, although the weekly RSI indicator is in an overbought zone with potential bearish divergence.
A Netflix shares price forecast for 2022 should take into consideration the upper band of the channel as key resistance. The key support area and the lowest Netflix shares price that keeps the uptrend intact is $570: the lower band of the channel, the 52-week moving average, and the previous high that become support.
Buy Netflix shares or not?
It is recommended to watch for stocks at the major long-term support area. We should buy Netflix shares at relatively cheap prices (compared to historical values), not expensive prices. Also, have an exit plan for how you will exit a profitable trade. Define how and why you will exit. Since we used to support to get into the trade, you may consider exiting just below a long-term resistance level.
If buying at support, and planning to exit just below resistance, the upside potential should outweigh the downside risk by at least 2:1 or even 3:1. That means that if you buy Netflix shares at $575, you should be reasonably able to get out of the stock at $525 or higher. In an absolute worst case you lose $50 a share (but since we don’t hold losers forever, this is highly unlikely), but based on the historical chart it is quite feasible to go up to $100/share or more. This is known as the risk/reward ratio, a key indicator when deciding to buy Netflix shares or not.
With CAPEX WebTrader, you can perform an in-depth analysis of the charts with 90 indicators (including moving average, MACD, RSI, and Bollinger Bands). The platform also supports an interactive trading activity with high-end research tools helping you interpret market data.
3. Understand the risks and charges
Trading can be seen as riskier than investing due to leverage. But investing also carries a risk – and there is no guarantee that your investments would increase in value, so you could receive back less than you initially invested.
Before deciding to trade in shares, you should take steps to manage your risk. We have courses at CAPEX Academy that take you through risk management and how to mitigate your exposure to risk in the financial markets.
Our costs and charges for trading vary depending on the product that you use to take a position.
Netflix (NFLX) CFD Trading Conditions
|SPREAD PER UNIT||0.55 pips||LEVERAGE||1:5|
|OVERNIGHT ROLLOVER - LONG||-0.0076 %||OVERNIGHT ROLLOVER - SHORT||-0.0063 %|
|INITIAL MARGIN||20.0000 %||MAINTENANCE MARGIN||10.0000 %|
- Spread represents the difference between ASK price and BID price.
- Future Rollover adjustment consists of the difference in price between expiring contract and new contract as well as the spread of the CFD.
- Swap is the amount credited to or debited from an account where positions are held overnight.
- Inactivity fee represents the monthly amount deducted if no activity is recorded for 12 months in an account.
4. Access the trading platform and place your orders
To buy Netflix shares CFD with CAPEX Webtrader is very easy and intuitive. Opening an online trading account is as easy as setting up a bank account. Here are the steps:
Open an account or log in
First, create an account or log in on capex.com. To open an account click the "Register"button and complete your details.
Once the platform is accessed, the registration process must be completed in order to operate with real money. Click "Complete the Registration and Start Trading".
To log in, from the CAPEX website, click on "Login".
Deposit funds into your account
To trade with a live account it is necessary to deposit funds. This is done from the platform itself by clicking on the "Add funds" button:
Also, it is possible to trade on a risk-free demo account with a balance of € 50,000, which is ideal for getting to know the platform and testing trading strategies.
CAPEX offers you different payment methods: debit cards, credit cards, bank transfer, skrill, and more.
It is noteworthy that CAPEX does not charge any fees or commissions for depositing funds.
Look for Netflix shares
To view Netflix shares (NFLX) real-time price and chart on the trading platform can click on the "Search" icon located in the left panel or by clicking on "Shares" and then select the instrument, in this case, Netflix.
Use the indicators and drawings to analyze the chart
Click the indicators icon and select your favorite ones. There are trend following, oscillators, volatility and support/resistance indicators available. To learn how many indicators to use and how to combine then visit the Technical Indicators section in CAPEX Academy.
Set up the order to buy Netflix shares
To buy Netflix shares CFD, click on the "Buy" button and a window is displayed to configure the purchase order:
The number of Netflix shares to be purchased must be entered and it is allowed to set up a Stop Loss to limit the potential loss, and/or a Take Profit to close a profitable position once the Netflix stock reaches a specific price. These orders can be configured based on price, pips, cash value or percentage.
To proceed with the purchase, click on "Place Order".
However, NFLX trading does not end here. You will want to check out the next step to make sure you are investing your money as well as you can.
Why Trade Netflix with CAPEX?
- Advanced AI technology at its core: Whether they prefer the web-based and mobile-ready WebTrader or favor the highly popular MetaTrader 5, we make sure investors make effective use of fast and reliable trade execution speeds, complex order and risk management tools, advanced charting options, powerful research tools in collaboration with highly-regarded platforms such as Trading Central or TipRanks.
- Trading on margin: Providing trading on margin (up to 5:1 for individual equities), CAPEX gives you access to the stock market with the help of CFDs.
- Trading the difference: When trading Netflix CFD, you do not buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of the Netflix stock price. Online trading with CFDs is nothing different from traditional trading in terms of strategies. A CFD investor can go short or long, set stop loss, take profit, and apply trading scenarios aligned with their objectives.
- All-round trading analysis: The browser-based platform allows traders to shape their market analysis and forecasts with sleek technical indicators. CAPEX provides live market updates and various chart formats, available on desktop, iOS, and Android.
- Focus on safety: CAPEX puts a special emphasis on safety:
- capex.com is a website operated by KW Investments Limited, which is authorized and regulated by the Seychelles Financial Services Authority, license number SD020.
- capex.com is operated by Key Way Investments Ltd and is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) (license no. 292/16).
- za.capex.com is operated by JME Financial Services (Pty) Ltd and is authorized and regulated by the South African Financial Sector Conduct Authority (FSCA) (license no.37166)
- ae.capex.com is operated by Key Way Markets Ltd and is authorized and regulated by the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority (license no. 190005).
- Global partnerships: CAPEX is proud to be the Official Sponsor of Juventus, one of the most prestigious football clubs in the world, a football club that has a special place in the hearts of the people of Italy, with a strong legacy and a dedicated community.
5. Stay up to date with the latest news and rumors about Netflix
Get the latest Netflix (Nasdaq: NFLX) stock news and headlines to help you in your trading and investing decisions.
History of Netflix
Let's have a look at some info and details about Netflix's history, starting from when it was just a store in California to the present day when it is a world-renowned streaming service.
In the following year, the two founders met with Jeff Bezos, who offered to purchase Netflix for as much as $16 million. While Randolph thought it was a fair offer, Hastings, who held 70% of the company, turned down the offer. However, two years later, Randolph and Hastings offered to sell the company for $50 million to Blockbuster LLC during the dot-com bubble.
On May 23, 2002, Netflix became a publicly-traded company, having its market debut on the NASDAQ. At the closing bell, Netflix's stock price was $15 a piece. Following the IPO, it had a market capitalization of around $300 million. After losing more than half of its value in the following months, Netflix stock recovered sharply. Also, by 2003, the company had 1 million subscribers. Today, Netflix's market cap exceeds $276 billion, higher than some countries GDP.
Since the IPO, Netflix has split its stock twice. In 2004 had s a 2-for-1 stock split, while the second was in 2015 – a 7-for-1 split.
In 2010, Netflix reached a $1 billion deal with Paramount, Lionsgate and MGM.
In March 2011, Netflix acquired its first original title for its library – House of Cards.
The streaming giant continued to expand throughout the years. In Q4 2017, Netflix reported 117.5 million members. Its streaming revenue went up 36% to over $11.6 billion, achieving for the first time a full-year positive international contribution profit.
Netflix had its best quarter ever in Q1 2020, adding a record 15.7 million global subscribers after COVID-19-related lockdowns began in countries around the world. It boasted 183 million total subscribers. Following the report, Netflix's stock price jumped 9%.
In 2021, Netflix made a significant jump in the Fortune500 rankings, from 164 to 115, with its sales close to $25 billion. People from 190 countries can access Netflix's streaming services in more than 30 languages.
In October 2021, Netflix revealed the launch of Netflix Book Club – where readers will find out about new books, films, and series adaptations. Moreover, users will be able to assist each book's adaptation process.
To preserve the global ecosystem and work on combating climate changes, Netflix announced it would make the necessary changes to reach net-zero greenhouse gas emissions by the end of 2022. According to Netflix's estimates, by 2030, the operations and electricity use emissions will be cut by 45%.
*Last Update: November 2021. Source: Wikipedia
Netflix (NFLX) Latest Stock News
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