How to Buy Netflix Stock (NFLX)

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Netflix, one of the world’s largest providers of streaming services, suffered a sharp drop in its share price earlier this year. Its share price fell from an annual high of $701 (£579) in November 2021 to a low of just under $166 (£137) in April 2022.

But it has since seen a recovery to $237 (£195) in August, thanks to better-than-expected second-quarter numbers.

In April, Netflix was punished for announcing quarterly earnings below investors’ expectations. Netflix suffered its first drop in paid subscribers in a decade, losing 200,000 subscribers in the first quarter of 2022.

He grimly forecast a further drop of 2 million subscribers in the quarter just ended, attributing it to account swapping, competition from rival streaming services like YouTube, Amazon and Hulu and difficult macroeconomic conditions.

But it turns out that Netflix was too bearish: the number kept falling, but by ‘only’ by 1 million, to 220.67 million. The popularity of Strange things it is considered one of the reasons for the slower decline in subscription cancellations. Additionally, he expects membership to grow by one million in the third quarter.

Revenue fell in the quarter just ended, from $7,868 in Q1 to $7,970 in Q2, but this still represents 8.6% year-over-year growth from the Q2 2021 figure of $7,342.

How to buy Netflix shares

Let’s take a closer look at what you need to know about buying and selling Netflix stock.

Investing in stock-based investments can be a good way to produce higher returns than cash-based investments. However, your investment may go down as well as up, and you may not get your money back. If you are unsure about the right investment, you should seek financial advice.

Before you decide to open an account, you should set your investment goals, including the amount you want to invest, the length of time you plan to invest, whether you’re comfortable with the risks involved, and whether you can afford to lose the money. .

If you’re looking to buy Netflix stock, the following steps will guide you through the process:

1) Open a trading account

Whether you are an experienced stock trader or a beginner, you will need to open an account with a trading platform.

It’s worth taking the time to review the costs involved: most, but not all, platforms charge a share trading fee and some may also charge an annual platform fee for holding shares.

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There are a variety of trading platforms available, from online DIY platforms like Hargreaves Lansdown, AJ Bell, and interactive Investor, to app-based platforms like eToro and Trading212.

2) Where is Netflix listed?

Netflix’s stock symbol is NFLX. Netflix is ​​listed on the US Nasdaq, which is open for trading from 9:30 am to 4:00 pm ET Monday through Friday.

Most trading platforms allow you to buy US stocks. You will be charged a foreign exchange fee (usually around 1%, but can range from 0.15% to 1.5% depending on your platform). Many platforms also charge a slightly higher trading fee for buying US stocks.

If you plan to trade US stocks regularly, it is worth looking at the different platforms as their fees can vary significantly. A small number of trading platforms, such as IG, allow you to keep your account in US dollars, which can reduce the exchange rate you must pay.

You will be required to complete a Form W-8BEN which allows you to benefit from a reduction in withholding tax from 30% to 15% for qualified US dividends and interest.

You will also have currency exposure if you own US stocks. If the pound weakens against the dollar, your shares will be worth more in sterling (and vice versa).

As with UK shares, any gains from US shares will be subject to Capital gains tax, subject to your annual allowance (currently £12,300). You will not have to pay Capital Gains Tax if you hold the shares in an Individual Savings Account or a Personal Invested Pension.

3) Do your research

For more information about Netflix, visit the company’s website. investor relations page.

It’s also worth comparing Netflix’s valuation to other comparable global streaming companies. One way is to look at relative price-earnings ratios: Stocks trading at a high price-earnings ratio have high expectations for significant future growth.

Another useful research tool is brokers’ 12-month stock price forecasts, which are available on financial websites. There are currently nearly 50 brokers following Netflix stock, and their price forecasts give an indication of the upside and downside risk of Netflix stock price over the next year.

4) Should I invest monthly or in a lump sum?

People tend to buy stocks either as a lump sum purchase or as a trickle down of their investment monthly over time.

Monthly investing is often referred to as a means of ‘averaging the cost of the pound’, whereby making regular contributions helps smooth out the ups and downs of the stock market. This provides some protection if the share price falls after you’ve bought it, since you’ll effectively be investing at the average share price over the entire period.

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However, trickle-feeding your investment may sacrifice capital growth if the stock price is rising, and you may also pay more in stock trading fees.

5) Place your order

Once you are ready to buy shares on Netflix, log in to your trading account. Type in the stock symbol NFLX and the number of shares you want to buy or the amount of money you want to invest.

Many platforms also allow you to add a “stop loss” after you’ve bought the stock, allowing you to limit your losses if the stock price falls. For example, if you buy shares at £100 and set a loss limit of £90, your shares will be sold if the share price falls below £90, limiting your potential loss to 10%.

6) Monitor Netflix performance

Whether you own shares in a few or many companies, you should periodically review the performance of your shares.

Tracking your portfolio allows you to make any necessary adjustments, either buying additional shares or selling part of your holding.

How to sell your Netflix shares

When you want to sell your Netflix shares, log in to your trading platform, type in the ticker symbol (NFLX) and select the number of shares you want to sell.

If you have made a profit, you may have to pay capital gains tax (CGT) on the sale of your shares. However, as mentioned above, this is not the case for tax-exempt packages such as Individual Savings Accounts.

How to invest in Netflix indirectly

You can make a profit if you invest in Netflix stock, however, owning stock in an individual company is higher risk than investing in a wide range of stocks. A diversified portfolio should also reduce volatility.

One option is to invest indirectly in Netflix by investing in a fund, investment trust, or exchange-traded fund (ETF) that owns Netflix stock, among others. These products provide a prepared portfolio of shares in several different companies.

There is a wide range of options, including global, US and technology funds and mutual funds, along with ETFs that track the Nasdaq index. However, you will pay an annual administration fee to maintain these products.

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