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Buy Netflix Stock: How To Invest In NFLX Shares And What To Look Out For

As the world's largest streaming company, Netflix has over 167 million subscribers worldwide. If you're thinking of buying some Netflix stocks, check out our guide below to know what platform you should sign up for.
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Author: Veronica Eltz
Last Updated: 27 March 2020

Who would have imagined that legendary actress and ex–wife of cable TV magnate Ted Turner would help a streaming media company called Netflix replace the cable networks. Jane Fonda’s series “Grace and Frankie” was among the Netflix Original shows to be nominated for a record 112 Emmy awards in 2018. As viewers disconnect from their high monthly cable subscriptions for unlimited streaming media, Turner programs, Disney shows and HBO hits are racing to become streaming services like Netflix.

As the world’s largest streaming company Netflix becomes a premium content producer, this guide will look at Netflix’s future growth opportunities, how to value Netflix stock, and the best Netflix stockbrokers.

Best U.S. platform to Buy Netflix Stocks

If you’re a U.S. resident and want to invest in NFLX, we recommend Stash Invest where you can claim a $50 bonus and get started with only $5. Click the button below to get started today.

Stash Invest - Invest in stocks with just $5

RATING

  • U.S. friendly stock broker
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  • Fees as low as $1 per month for basic banking and personal investing
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  • $50 bonus available when you deposit $300 within 30 days

Best non-U.S.Platform to Buy NFLX Shares

Plus500 is one of the most respected stock brokers, with over 2,000 shares and securities to choose from and holding FCA & CySEC licenses. They offer an intuitive platform and 0% commissions on stock purchases. This broker is popular in the UK and Europe, and is available in many countries apart from the U.S.

Plus500 - No.1 stock broker for non-U.S. customers

RATING

Plus500 Broker
  • Lowest spreads in the market
  • No commissions on trades
  • Listed on the stock exchange and FCA & CySEC regulated
  • Advanced stock analysis tools including historical charts, news, and realtime prices
  • Over 2,000 shares to buy
Plus500 Broker
75% of retail investors lose money when trading CFDs with this provider.

How to Buy Netflix Stocks in the U.S.

For those looking to invest in Netflix from the U.S., the Stash Invest app is a fantastic choice. Their app provides hundreds of shares to buy from as little as $5 and offers the lowest fees in the market starting at $1 per month.

Step 1: Create your Stash Invest account

Begin by entering your basic information, downloading the app and move onto step 2.

Step 2: Complete your trading profile

Fill in some information about your trading style and needs. The app will then create a custom investment profile for you, which will help you make the best choices in your investments.

Step 3: Check your investment options

You must then select your investment options. Your risk tolerance will either be conservative, moderate or aggressive.

Step 4: Fund your trading account

You must then add funds to your balance which you will be able to use to buy Netflix stocks.

Step 5: KYC & Verification

Next, verify your identity and present the required documents to have your profile activated. The app will also ask you to create a unique pin for safety.

Step 6: Buy Netflix stock

Search for “Netflix” in the search box, enter the amount you want to invest then click the “Buy” button.

  Visit Stash Invest

How to Buy Netflix Stocks outside the U.S. 

As the popularity of Netflix grew, so have different ways of investing in it. You can now invest in NFLX shares on various online stock brokers, and autotrading robots such as Netflix Revolution have even cropped up, which are said to trade Netflix stocks for you while you sleep. In the next section we will be reviewing how to buy Netflix stocks outside the U.S. through Plus500.

Plus500 is fantastic for the experienced and beginner trader looking to invest in Netflix as they provide tools, stock data, news and technical indicators to make it as easy as possible.

Step 1: Register your account

To begin trading Netflix CFD stocks with Plus500 click here. You will be prompted to download the plus500.com mobile app to register.  Select between a Demo and Real Money account. After filling in basic personal information, you will gain access to the unlimited demo account. Before you can use it, you will be prompted to answer a few questions to establish your investor risk profile.

Step 2: Fund your account

When you are ready to trade with real money, fund your account. Three payment options are provided. You may be asked to verify your payment method.

Step 3: Verify your identity

Attach and submit proof of identity for verification.

Step 4: Trade Netflix CFD stock

Plus500 offers a wide variety of CFDs on investment instruments, including stocks, ETFs, indexes, forex and cryptocurrencies. On this trading platform for the advanced investor, options are also available. Query Apple and the price quotes for the stock, as well as put and call options, appear on the screen.

All stock information and the Buy/Sell commands are displayed on the general stock page for the serious trader who wants to execute quickly. The bottom half of the page displays the price chart and provides access to a broad selection of technical analysis indicators.

  Visit Plus500

80.6% of retail CFD accounts lose money

It pays to compare the different brokers and trading features you require. If you want high flexibility and frequent trading, then the transaction costs should be as low as possible. Recommended brokers in this case are Markets.com or Plus500. Or do you seek to make a one-time purchase or long-term investment with the help of savings plans? In this case, review classic online brokers such as Markets.com

Should you invest in Netflix?

Image result for netflix

The decision of the world’s largest entertainment media giants to move their programs to direct-to-consumer streaming is an indication of how large the streaming market will become. For now, though, Netflix stock is one of the few ways to invest in the rapidly growing streaming market. As the first mover, Netflix has a clear advantage as cable cord cutting continues and mobiles replace landline phones. If you want to invest in the future of movie and TV viewing, check out the top IOS apps. Netflix is the number two app on the planet.

Pros of buying Netflix stock

Global subscribership growth

As the number of households disconnecting from cable grows, Netflix subscriptions grow. The rate of conversions is astounding. In the US, viewers spend a billion hours a day consuming media. Ten percent of those hours are spent watching Netflix programming. The streaming company competes with television, online video, gaming and DVD for viewer eyeballs. Led by international subscriber growth, Netflix hit 139 million subscribers in 2018. The streaming leader is not worried about sharing its market with newcomers.

There’s a billion hours of television content being consumed … We’re winning about 10 percent of it. … Disney, they have great content. We’re excited for their launch, and maybe they grow over a couple years to 50 million hours a day, but that’s out of the billion. Reed Hastings, Chairman/CEO, Netflix

Netflix Originals

Netflix made a bold bet on becoming a movie studio when its profit margins collapsed in 2012. The cost of content paid to the big studios like Disney and WarnerMedia was soaring. Last year, almost 40 percent of viewing on Netflix was of original content. Netflix is creating hits and movie and TV stars, says its content chief. And crucially, it holds the rights to future revenues on the releases, advertising and product sales – not the big studios. New engagement techniques like interactive programming allowing viewers to choose the ending is increasing viewership. But how did Netflix produce more magic than Disney at the Emmys? Netflix’s proprietary marketing analytics tools tells it with impressive accuracy whether or not a show will be a hit with viewers.

Content rights with benefits

Producers of movies and TV shows typically sell their content for 60 to 70 percent of production costs plus rights to a percentage of future revenues, according to industry pub Variety. Netflix pays content producers all of the production costs plus 30 percent. Netflix then retains the rights to future revenue, including from advertising and product sales.

Cons of buying Netflix stock

The studios are coming!
The streaming on demand media model Netflix created is so compelling, the entertainment and media industry is transitioning to the Netflix model. Disney, AT&T WarnerMedia, Comcast and Apple are all launching direct-to-consumer streaming in 2019–2020. These content partners have watched Netflix shares increase 500 percent in value since its first series House of Cards was launched in 2012. The cable guys have no choice but to jump a sinking ship. Streaming is part of Apple’s plan to boost the Apple stock price through its growing services division.

Rising content costs

Netflix will lose access to some of the content of its new competitors as they become streaming media services. Prices are already rising. Netflix will pay $100 million to keep the Friends series for 2019, up from $30 million in 2018. Though Netflix will no longer pay $150 million a year to Disney. It is already putting the money to good use. Netflix has recently poached several producers from Disney-owned studios. Notably, Ryan Murphy of America Horror Show has a $300 million 5-year deal to produce shows for Netflix. In 2018, Netflix’s content expenses were half those of Fox, Disney and WarnerMedia but still higher as a percent of revenues.

High cash burn

Netflix had negative cash flow of $3 billion in 2018 and expects the same for 2019. Over the past five years, for every one percent in revenue growth Netflix grew profits 2 percent. Trouble is, content expenses grew 50 percent over this period, or 10 percent for each percentage point in revenue. Netflix’s margins are widening, and the company expects them to continue to expand. Although its investment in content is high, as the digital movie house produces more Emmy-worthy content, these shows could create long-term revenue streams as its cost-plus model ensures it gets more of the revenues from rights, advertising and products.

Cable cord cutting also provides investors opportunities to profit as stock prices are discounted during the transformation to streaming. Disney, for example, is losing $150 million in annual Netflix licensing fees and producing more original shows. Investors could buy Disney stock before its streaming value is unleashed.

Although Netflix faces an onslaught of competition from traditional studios, in our opinion, its loyal fans will reward the patient, long-term investor in Netflix shares.

Netflix Stock: Current Prices and Summary

Netflix has an astronomically high price-to-earnings (PE) ratio at 134. Its future competitors AT&T WarnerMedia, Comcast and Disney have much lower PEs of 11, 16 and 16, respectively. Is the market fairly valuing Netflix, or are all those fans of its dystopian sci-fis mixing fantasy and reality? Let’s take a closer look. Netflix is investing a lot of money in its original content. In 2018, the company burned through $7.5 billion in cash. The return on invested capital (ROIC) reveals if Netflix is making positive returns on those investments. These returns need to exceed what it costs Netflix to raise the investment capital. Netflix’s ROIC is negative and declining. Chairman Reed Hastings, however, expects a turn up in 2020.

Analysts estimates support this more profitable picture. Over the next few years, analysts forecast revenues will continue growing at more than 20 percent while earnings will grow at 60 percent. Netflix’s high returning revenue model could explain the valuation. Let’s take Disney as an example. Netflix paid Disney $300 million for Star Wars episodes it is streaming all over the world. Disney not only gets the licensing revenue but also sales of all the related Star Wars products fans in India, Brazil and elsewhere are buying. Whereas on the $300 million Netflix paid to Ryan Murphy for content, under the cost-plus model Netflix would get all the licensing, product and advertising revenues.

NFLX price quote

Netflix  (NFLX)
Price$ 170.93Daily high$ 171.44
Volume18963658Low$ 169.50
Variation12:51Opening$ 169.71
+ / -%00:30%Day before$ 170.42

A Brief Overview of the History of Netflix

Technology executive Reed Hastings wanted to find a way to improve the movie rental business when he started a DVD rental by mail service in 1997. In 2007, the Stanford computer scientist graduate started to stream movies over the internet. The co-founder and first CEO of Netflix Marc Randolph was also a co-founder of computer mail-order businesses Macworld and Microwarehouse, and Macworld magazine. His development of data analysis tools to improve marketing and the customer experience was instrumental to the early success of Netflix. The company still uses Cinematch to measure audience ratings of movies, and today also applies it when deciding which movies to develop for Netflix Originals.

Five years after Netflix went public in 2002, the company switched to its streaming content model. Netflix’s popularity grew with the release of the first IPhone (2007) and Android (2008) phones followed by tablets and higher speed broadband networks. By 2012, the company was struggling under high content costs and started making its own Netflix Originals. By 2019, Netflix had over 140 subscribers worldwide. In 2018, Netflix’s market cap briefly surpassed that of Disney’s when it hit $150 billion. Hastings sits on the board of Facebook and owns $10 million in Facebook shares.

Netflix Shares: Forecast 2019–2023

Over the next five years, the streaming media market will become more crowded. Investors deciding whether to invest in Netflix or buy Disney shares for its huge content library or Apple stock for its iTunes users should consider Netflix’s first mover advantage in streaming. Netflix credits its high content engagement, success with new shows and marketing effectiveness to the data analytics it has applied since its early days. And here are some more numbers, Netflix will love – the stock of first movers outperform the rest. Since its beginning two decades ago in mail order DVDs, Netflix has been establishing brand value and customer loyalty among movie fans.

2019 – Higher subscription prices

Netflix subscribership is forecast to grow at higher rates over the next five years. A subscription price increase in 2019 will raise revenues per subscriber. Together with falling content costs, operating margins, which are expanding at 3 percentage points a year, will widen to 13 percent this year. Analyst median Netflix forecast is for a median stock price of 418, with a low of 165 and a high of 500.

2020 – The year of streaming media

Netflix trades in a pack of high performing technology stocks called the FAANG (Facebook, Netflix, Apple, Netflix, Google). Netflix stock is on a tear in 2019, rising 33 percent by mid-March followed by 31 percent for Facebook stock. Netflix, Apple and Google stock have growing exposure to the hot streaming media market. Low-to-median stock growth is forecast.

2021 – International co-productions

By 2021, more people will have mobile than landline phones. Countries will be upgrading to 5G service. This will open the door to more Netflix co-productions to produce more content for local markets and then stream it worldwide. Bodyguard, for example, was a coproduction between the BBC and Netflix made for the UK market and simultaneously streamed worldwide. These co-productions, which could grow from 140 in 2018 to well over 250 in 2021, are another way to lower programming costs. Median-to-high stock growth is forecast.

2022 – Streaming over TVs

Set-top TV boxes are not going to become obsolete. Companies like Roku and Comcast are bundling streaming media services in a package to be played over the TV. Netflix has started joining those bundles. This is a new revenue stream for Netflix that it may not have captured otherwise outside of a bundle. Median-to-high stock growth is forecast.

2023 – Streaming competition

By 2023, forecasts estimate Apple and Disney+ will each have 100 million subscribers. Netflix’s margins should be in the low 20s similar to those of Disney, Comcast WarnerMedia and 20th Century Fox before the Disney acquisition. These entertainment giants, meanwhile, will be upping their content budgets to develop originals for streaming. While they will be able to scale to 100 million users in a quarter of the time of Netflix, Netflix’s strong international momentum will be accelerating. Low-to-median stock growth is forecast.

Conclusion

Undeniably, Disney is not the only one with content magic. Netflix had an impressive 121 Emmy nominations this year. The proprietary marketing analytics that have been the engine of business growth since the early days are consistently helping to develop winning content. Netflix has two decades of data on streaming media subscriber preferences. This marketing intelligence may be the real first mover advantage of Netflix against its new competitors, and the best reason to buy NFLX shares.

When you are ready to buy stock, we recommend doing so via a regulated online broker such as Alvexo if you’re a UK customer, and Ally Invest for U.S. customers.

Stash Invest - Invest in stocks with just $5

RATING

  • U.S. friendly stock broker
  • Fractional shares available - invest in stocks with just $5
  • Fees as low as $1 per month for basic banking and personal investing
  • Build a portfolio of stocks and ETFs for free
  • $50 bonus available when you deposit $300 within 30 days

Plus500 - No.1 stock broker for non-U.S. customers

RATING

Plus500 Broker
  • Lowest spreads in the market
  • No commissions on trades
  • Listed on the stock exchange and FCA & CySEC regulated
  • Advanced stock analysis tools including historical charts, news, and realtime prices
  • Over 2,000 shares to buy
Plus500 Broker
75% of retail investors lose money when trading CFDs with this provider.

FAQs

Does Netflix pay a dividend?

No, Netflix does not pay dividends. Instead of paying dividends, high growth companies return value to shareholders in the form of increases in stock value and invest in acquisitions to sustain growth. Over the past 10 years, Netflix has returned 51.5 percent to shareholders whereas the S&P 500 with dividends reinvested returned 15.5 percent.

Is Netflix still in the DVD rental business?

Netflix has been renting out DVDs by mail since its founding in 2007 from www.netflix.dvd.com. In 2018, Netflix made a profit of $ on $ in DVD sales. Netflix has a library of over 100,000 DVD titles. In addition to films, Netflix rents out TV shows.

What is the size and future potential of the streaming video market?

Netflix has 140 million subscribers.Hulu has 50 million subscribers. The service is US-based.Amazon Prime has 100 million subscribers.In 2019, Disney+, Apple and ATT WarnerMedia are launching streaming services. They are forecast to have 100 million subscribers each by 2023. In 2020, Comcast plans to sign up 50 million users to a free ad-based streaming service. Within five years, the direct-to-consumer streaming market will double its subscriber base. Many subscribers will be cord cutters from cable channels.

Where and how can you buy Netflix stock?

You can buy Netflix stock from online stockbrokers. Markets.com and plus500 are examples of online broker platforms where traders buy and sell Netflix stock. After signing up online, type in the NFLX ticker, place your order and you will become an owner of Netflix shares.

A-Z of Stocks

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Remember, all trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
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Veronica is a stock and crypto expert who lives with her husband and golden retriever in Ohio. She has written on trading and risk management for financial and fintech publications around the globe. Coverage ranges from emerging blockchain developments and ICOs to asset tokenization, and crypto and derivatives trading strategies for both the individual and institutional investor market.

4 thoughts on “Buy Netflix Stock: How To Invest In NFLX Shares And What To Look Out For

    1. Hello Zell991, any bold move like Netflix’s global expansion impacts on the stock price of the company. It depends on how excited the investors are regarding a specific business move of the company. As per our research, Netflix’s global expansion has impacted on the company’s share prices positively.

    1. Hello Jink25, Netflix is currently facing a transition because Disney is rumored to be launching its own media distribution service. This is the main reason why investors are getting scared that Netflix’s demand will decline in the future. Other than that, Netflix is doing great and its stocks are on a pretty healthy track.

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