Introduction: How to buy Netflix stock
At this point, you’ve almost certainly experienced Netflix’s product firsthand. “Stranger Things,” “Orange is the New Black,” “Sense8,” “Tuca & Bertie” and so many more – all of these Netflix originals make up the core product that has millions of streaming each day to watch their favorites on demand. In conjunction with its collection of network television shows and feature movies, Netflix has become a valuable leader in the streaming entertainment market.
While Netflix’s value to its users is undeniable, a prospective stock investor in the company might be quick to question whether or not the company is positioned to grow in value in the immediate future. The answer to that question is not necessarily cut and dry, requiring you to take the time to compare key criteria such as corporate financial standing and history before buying into any stocks.
If the stars align and appear to match your present investing goals, then you’ll be able to purchase a handful of Netflix (stock symbol “NFLX”) stocks at your convenience through your preferred brokerage medium. From then until you sell your stocks off, you’ll have a financial ticket into one of the industry leaders in a burgeoning digital entertainment and distribution market.
Step 1 – Learn About the Company
Whether you’re a current user or simply a curious examiner, you probably already have a preconceived notion of what Netflix is, as a company. While its core product may be obvious, you may actually be surprised about its history, competition, and level of product diversification once you look beyond the surface. As such, your first step towards buying Netflix stock (or any other stock) should involve some concerted research into the company’s biographical details.
At its core, Netflix’s streaming media library can be split into two categories, each of which make up a distinct product offering from the multi-billion dollar company. First, Netflix’s in-house and partnered content (called “Netflix Originals”) have evolved in recent years to become its favorite son, both for promotion and financial investment. Popular shows such as “The Patriot Act,” “Dear White People,” and “The Crown” have all originated on the platform, allowing it to gain more attention than many network program lineups.
However, Netflix still maintains a rich assortment of non-original content, which includes several popular network and premium TV shows. Taken together, these two product categories have allowed Netflix to become a bastion of the ever-growing streaming media market. While other competitors offer a similar product, few can match the scale and level of diversification (in terms of content genre) Netflix offers to its users.
While it may feel like Netflix really hit the scene in the last decade, the company itself finds its origins back in 1997 as an online DVD rental service. Netflix was a pioneer in that field and managed to find sure footing even after the dot-com bubble burst in the early 2000s, with an IPO of around 5.5 million shares in 2002. The company turned its first fiscal profit in 2003 through its new membership fee structure and never looked back.
By 2007, Netflix managed to take advantage of structural improvements in streaming media capabilities to diversify their product delivery structure. At the same time, Netflix began to de-emphasis DVD rentals, choosing instead to push more users to the cost-effective digital delivery model. This gamble worked, as Netflix’s most exponential growth corresponded with decreases in their DVD rentals from 2006 to 2011.
Today, this digital video on demand service (and its associated membership fees) makes up the entirety of Netflix’s business structure. With some 137 million users in 2018, Netflix today stands as the largest player in its market, allowing it to leverage more and more of its resources towards its original content.
Digital titan Amazon also offers competition for Netflix in the form of its Prime Video service. Much like Netflix, Amazon offers an admittedly smaller library of original content for its Prime users to stream on demand. While a competitor in direct terms, Amazon’s fee-structure for Prime membership (which includes a bevy of other features) makes it extra expensive for those not looking to bundle in other services.
More competition is on the way for Netflix, though, putting their hegemony at risk. More niche-audience streaming services are set to debut in 2019 and 2020, such as Disney’s “Disney+” platform. While the direct impact of these new competitors is not yet clear, it is expected to modify the current market share against Netflix’s favor.
Step 2 – Research Financial Standing and Outlook
A company like Netflix is more than its history and product, though. In fact, when it comes to stock investment considerations, matters of financial standing, performance, and outlook may serve an even larger role in informing your purchasing decisions. These factors will absolutely influence how your purchased stocks perform in both the short- and long-term, so it is absolutely worth your time to research these following categories carefully.
When investing in any stock, you must take time to gain a realistic appraisal of how the represented company turns a profit. While this can be complex for some types of corporate stock, Netflix keeps this matter fairly straight forward by relying on its membership fees to drive profits. With basic, standard, and premium options, users are able to gain access to tiered content based upon their budget.
Subscription fees (as well as exterior investment) make up the meat and potatoes of Netflix’s revenue meal today. Currently, Netflix does not rely on ad revenue to support its platform (as most of its membership packages require few to no ads). Moreover, Netflix does not currently state that they gain any profit from sharing or selling user data (though the exact nature of this revenue stream is unclear due to minimal regulations).
Debts or Major Losses
Investing in a stock like Netflix is all about evaluating and balancing risk, so it is only natural that major financial inhibitors such as major debts or recent revenue losses be calculated in before fully committing. As it stands, Netflix actually carries a sizable debt burden such that investors should take note before snapping up stocks.
Generally speaking, Netflix has been fairly resilient to debt-related barriers over the past several years. Even so, Netflix has so far generated a cash loss of $3.5 billion in 2019, part of an ongoing trend that has made it harder for the company to keep its financial lifeblood easily available. While the cause of this deficit is multi-fold, some attribute it to growing competition in the streaming video market as well as high operating costs (especially for original movies and shows).
Stock Performance History
When talking stocks, it is only natural to take recent stock performance into account while deciding whether or not to buy Netflix shares. Based upon recent annual performance in this domain, prospective Netflix stock buyers have little to fear. Between 2016 and 2017, Netflix’s average per stock value grew massively from $102.03 to $165.37. At some points in 2018, their stock even traded for as much as $400 per share.
As recently as fall 2019, Netflix’s stock value continues to grow. That being said, Netflix’s stock value is currently dipping well below its peak value for the year due to announcements from competitors regarding their fee structures and content offerings.
Step 3 – Prepare your Brokerage Account
If the facts align in a desirable manner, you may be positioned to buy at your earliest convenience. To do this, you’ll need to take advantage of a stock brokerage service (either traditional or digitally self-managed). In either case, you should fully ensure that your personal plans align with the stock predictions before committing to a purchase of their shares.
Open a Brokerage Account
Naturally, you’ll need a brokerage account (if you don’t already possess one, that is). These are more accessible than ever, with industry stalwarts and robo-advisors alike competing to bring a new generation of investors into the marketplace. Many of these brokerage platforms offer investment incentives, making it easier to get into the market with minimal initial financial resources.
Our broker of choice is Webull. Why? Because it’s completely FREE! (like Robinhood) But it offers more features including IRA accounts. Also, when you open an account, you will get a Free stock.
A Role in your Invest Plan
Before committing to a purchase of stock, you should certainly have a realistic discussion with yourself to determine if the stock content and outlook matches your personal investment plans. More specifically, you should evaluate whether or not it’ll will help you diversify your portfolio and meet your investment goals.
Should you need it, a brokerage advisor can be a major asset in this step. If you’re new to stock investment in general, then you’ll definitely want to seek professional advice regarding the many ways this stock may affect your investment portfolio. Don’t skimp on this step, either, as it may be the difference between gaining and losing on your first stock purchase.
Now that you have an account, it’s time to Buy!
Finally, the step you’ve been waiting for! Using your platform of choice, you can now purchase a handful of stocks and begin monitoring them for value fluctuations. That being said, not all stocks are precisely the same, requiring a few more particulars to be addressed before completing the stock purchasing process.
Depending on your chosen investment strategy, you’ll need to choose the number of shares to add to your personal portfolio. The total order cost is going to be the number of share x the price of the stock. Example, if a stock is trading at $14.23 and you want to buy 10 shares, then it’ll cost 14.23 x 10 = $142.30
Finally, before finalizing your stock purchase, you’ll need to decide what “order” of stock you’d like to hold. Stock “orders” fall into three primary categories: market, limit, and stop. Market orders are the first and most obvious option for those who want to gain stock and do it quick. That’s because this option immediately executes a stock purchase, regardless of its present market price.
On the other hand, though, you can limit your initial investment cost by putting in a limit order. This allows you to automate a platform to only purchase stock if it floats down beneath a certain value-based threshold. This type of investment order will likely take longer and may not execute at all if the value of the desired stock never dips that low again.
Finally, when you want to further automate your stock purchasing and selling process, you can put in several stop orders. A buy-stop order, for example, can initiate a market order as soon as a stock value dips below a certain optimal value. In the same vein, a sell-stop order is able to sell off your existing stock if it loses a certain amount of value.
You have all the tools and information you need to purchase your next stock. Now it’s up to you whether to take the leap. Happy investing!
P.s. Don’t for get that Webull is FREE and you will get a free stock when you open an account. (For a limited time only)