How to buy Netflix stocks in 2024

1. eToro

eToro is a social trading and investment platform that allows users to trade a variety of assets, including cryptocurrencies. The platform is designed to be user-friendly and intuitive, making it a good choice for those new to investing. eToro also offers some features that can be useful for more experienced investors, such as the ability to copy other traders' portfolios. You can read our full eToro review here.

Security and Privacy

eToro takes security and privacy seriously, offering features such as 2-factor verification and encrypted passwords to keep user accounts safe. The platform also offers a strict anti-money laundering policy to protect users from fraud. To prevent abuse of the platform, they have put several security features in place, such as data loss prevention and restriction of access based on IP address. When a user invests, an additional security feature blocks the transaction from being executed if the account is linked to a potentially fraudulent user. In addition, they employ top vendors, web solutions, and firewalls, constantly on the alert to block a possible cyber-attack.

They take users’ privacy of utmost importance and never share their personal information without their consent.

Fees and Features

One of the most attractive features of eToro is that it is a multi-asset platform which gives access to over 2,000 financial assets like stocks, ETFs, indices, Cryptocurrencies and many more. eToro offers users Free Insurance that would cover claims in case of insolvency or an event of misconduct. Another feature that makes this platform one of the best around is the social trading feature. You can join a community of 20 million traders all around the world and connect with like-minds to shape your trading decisions. Lastly, the CopyTrader feature allows you to use the performance of some seasoned investors to know the one to replicate.

eToro offers 0% commission when you open a long, non-leveraged position on a stock or ETF with no management fees or deposit fees. However, the platform charges an inactivity fee of $10 per month if you don’t trade for 12 months. There is also a low fixed $5 fee for withdrawals.

Pros

• Security and Privacy
• Low fees and commission
• Copytrading
• Social trading

Cons

• High inactivity fee
• Limited customer service

2. Capital.com

Capital.com offers a variety of investment products and services to its clients. These include stocks, indices, commodities, shares, crypto, and forex. Capital.com has a wide range of clients, including retail investors, institutional investors, and high-net-worth individuals. You can read our full Capital.com review here.

Security and Privacy

Capital.com is licensed by several top regulatory bodies, including the FCA, CySEC, ASIC, and the FSA. This indicates that Capital.com customers are well safeguarded and that the platform adheres to strict guidelines to guarantee that consumer information is secure and hidden. In addition, Capital.com’s compliance with PCI Data Security Standards is another way it safeguards its customers’ information.

Every deposit made by retail customers is protected by the Investment Compensation fund according to regulatory guidelines.

Fees and Features

With CFD trading, customers have access to over 6,000 markets with tight spreads. Capital.com offers educational materials that can help customers to make more informed decisions. Another feature Capital.com offers is Spread betting. This gives customers access to speculate on upward and downward moves on over 3000 markets. The broker provides a tool powered by AI in its mobile trading app that offers individualized trading insights by utilizing a detection algorithm to uncover different cognitive biases.

Capital.com charges no fees on deposit, withdrawal, commission or inactivity.

Pros

• Tight spreads
• 0% commission with no hidden charges
• Artificial Intelligence
• Risk management tools
• Educational materials

Cons

• Overnight fees
• Mostly restricted to CFDs

3. Skilling

Skilling is an online trading platform that offers users the ability to trade a variety of financial assets, including forex, CFDs, and cryptocurrencies. The platform is designed to be user-friendly and provides traders with all the tools and resources they need to start trading. Skilling also offers a demo account so that users can practice trading before they start trading with real money. You can read our full Skilling review here.

Security and Privacy

The security and privacy of the Skilling online trading platform are taken very seriously. All information entered into the platform is encrypted and stored securely. Only authorized personnel have access to this information. In addition, the platform uses two-factor authentication to ensure that only authorized users can access account information. Skilling is regulated by the Cyprus Securities and Exchange Commission (CySEC), which means customers can rest assured about the security of their assets.

Fees and Features

Skilling has four different platforms; Skilling Trader, Skilling cTrader, Skilling MetaTrader 4 and Skilling Copy. Skilling Trader is designed for traders on all levels with access to all the tools needed for trading analysis. Skilling cTrader on the other hand is designed for advanced traders with a focus on order execution and charting capabilities. MetaTrader 4 is a forex and CFDs trading platform with a very versatile and easy-to-customise interface. Skilling Copy is a copy trading platform which allows members to have access to follow or copy trading strategies of seasoned traders at a fee.

Skilling does not charge any fee for inactivity, deposit or withdrawal. However, there are commission charges on FX pairs and Spot Metals on the Premium account type. These charges start from $30 per million USD traded.

Pros

• Reliable 24/5 customer support
• Over 1000 trading instruments
• Superb licensing and regulation
• Demo account

Cons

• Not enough educational materials
• High Spreads
• Service is unavailable in many countries including the US and Canada.

As a starting point, we take a more detailed look at Netflix as a company by exploring its history, business strategy, the way(s) it makes money, and how the stock has performed in recent years.

Netflix History

Netflix was founded on August 29, 1997, by Reed Hastings and Marc Randolph in Scotts Valley, California. They admired Amazon.com and wanted to sell something on the internet using the same model, so they came up with the idea of selling and renting DVDs by mail. However, after about a year, Netflix stopped selling DVDs to concentrate on renting them instead.

In 2007, Netflix expanded its business by introducing streaming media while retaining the DVD and Blu-ray rental business. By 2010, the company expanded internationally, introducing video-on-demand in Canada, Latin America, and the Caribbean. In 2013 Netflix started content production when it debuted the first series of House of Cards. By 2016, Netflix had expanded to more than 130 countries, and as of the time of writing in 2021, its content can be accessed from over 190 countries.

Netflix has made some acquisitions over the years. It announced the acquisition of Grauman's Egyptian Theatre from the American Cinematheque on May 29, 2020.

What Is Netflix’s Strategy?

Netflix’s initial strategy was to sell and rent DVDs by mail, but it has since abandoned DVD sales to focus on subscription-based DVD rental and online entertainment streaming services. The company offers unlimited streaming of movies and TV series on any internet-connected screen for a monthly fee, as well as DVD rentals for a monthly subscription.

Netflix does not offer any other type of content apart from movies, TV series, and documentaries, and a good portion of this content is created by the company itself. Netflix offers flat-fee unlimited commercial-free viewing with no pay-per-view or “free” ad-supported viewing. People can subscribe at any time, cancel their subscriptions when they want, and come back anytime they feel like it. This flexibility, which gives people the freedom to do what they want, is at the core of the business strategy.

How Does Netflix Make Money? 

Netflix's primary source of revenue is its subscription fees for streaming and DVD rental services. Viewers have the option of choosing from three different subscription plans: Basic, Standard, and Premium. The Basic plan starts at $8.99/month, the Standard is $13.99/month, and the Premium is $17.99/month at the time of writing. As of the third quarter of 2020, Netflix claimed to have over 190 million subscribers worldwide, and you can do the math by multiplying this user base by the subscription fees.

The company breaks down its revenue from streaming services into four geographic regions:

1. The US and Canada (UCAN)
2. Europe, Middle East, and Africa (EMEA)
3. Latin America (LATAM)
4. Asia-Pacific (APAC)

In the 2020 fiscal year, streaming revenue from the UCAN region accounted for 46% of the company’s total streaming revenue, while those from EMEA, LATAM, and APAC regions accounted for about 31%, 13%, and 10% respectively.

How Has Netflix Performed in Recent Years?

Netflix's share price has grown steadily over the years, with a few bumps along the way. Over the last five years, the stock has added about +505.46 points. It has grown from about $93.26 in September 2016 to $598.42 as of Sept. 10, 2021. That is, it has made over 500% (more than five times the initial investments) in profits. So, if you had invested $2,000 about this time in 2016, your investment would have grown to over $12,000 for a profit of more than $10,000.

No doubt, the performance is very impressive, and Netflix’s focused business model enables them to have a large portion of their target market. But can this amazing performance be sustained in the years to come?

Fundamental analysis is a way of studying an asset to know its true value. For a stock, you study the company’s business to know the intrinsic value of the stock (and hence assess how it might perform in the future). Fundamental analysis is different from technical analysis that looks for specific patterns in share price movements to forecast future price movements.

Some key financial metrics are used when performing the fundamental analysis of a stock. Some of them, such as the company’s management and goodwill, are not measurable. Here, we’ll focus on the measurable ones, such as the P/E ratio, revenue, earnings-per-share, dividend yield, and cash flow.

Netflix Revenue

A company’s revenue, which is typically presented at the top of its income statement, is the amount of money the company makes from the sales of its products or services before any costs have been deducted to get the profits (earnings).

The higher the revenue, the better, especially when compared to a similar period in the preceding year. Netflix’s revenue rose 24.0%, from $20.16 billion to $25.0 billion, for the 2020 fiscal year that ended December 31, 2021.

Netflix Earnings-per-Share

A company’s earnings refer to the profit recorded for the accounting period after all costs of doing business have been deducted from its revenues. It is often referred to as the “bottom line”.

As a shareholder, you only own a small portion of the company represented in shares. So, you should be more interested in earnings per share (EPS) rather than the total earnings. EPS is the amount the company earned for each outstanding share of its common stock.

For example, Netflix’s EPS is calculated by dividing its net earnings (after subtracting dividends paid to preferred stockholders) by the number of common shares outstanding. This metric is available on stockbrokers’ websites, so you don’t need to do the calculation yourself. Netflix EPS for the second quarter of 2021 was $2.97.

Netflix P/E Ratio

The price-earnings (P/E) ratio compares a company’s share price to its earnings-per-share and is calculated by dividing the current share price by the EPS.

For example, with Netflix’s share price at $598.72 and its EPS being $2.97, the P/E ratio would be about 201.59. Thus, as of September 2021, investors are ready to pay $201.59 for every dollar the company earns in profits.

Generally, companies with very high P/E ratios are considered overvalued. However, investors keep buying them in anticipation of huge earnings in the future.

Netflix Dividend Yield

Some companies distribute a portion of their earnings to their shareholders as dividends. It is one of the ways investors make money. Dividends are paid quarterly, semi-annually, or annually. When dividends are declared, the share price rises until after the ex-dividend date and then declines.

A dividend yield compares the total dividends a company pays in a year to its share price. For example, a company that pays out annual dividends of $2 per share when its share price is $50 has a dividend yield of 4%. You compare the yield with the interest rate to know if you are better off keeping your money in the bank. The dividend yield is seen alongside other financial ratios on the stockbroker’s website or any of the major financial websites.

As of September 2021, Netflix has never distributed its earnings to shareholders as dividends. Thus, its dividend yield is 0%. However, investors still make money from Netflix through capital appreciation as the share price has been going up.

Netflix Cash Flow

Cash flow refers to how money flows in and out of a business. It is one of the three financial statements you need to study when analyzing a company. You will see it beside the other financial statements in the financial section of the company’s information on a broker’s website or any of the major financial websites.

Focus on the free cash flow figure, which is the amount of cash or its equivalents a business generates after paying for major expenses necessary for running the business, including buildings, equipment, and other bills. It shows how much the company has to fund expansion, pay dividends, or pay down debts.

Why Buy Netflix Stocks?

The only fundamentals that Netflix falls down on are it not paying dividends and it having a very high P/E. However, when you consider that the stock is a leader in the streaming entertainment industry, you will understand why the P/E is high. What investors do not gain in dividends, they gain from capital appreciation.

These are some of the reasons you might want to buy Netflix stock:

• Netflix is a leader in entertainment content production and the most popular movie and TV series streaming service provider.
• The company is already exploring ways to expand its services, with plans to offer online video gaming and an online store for high-quality and limited-edition merchandise that is related to its popular shows and movies.
• The company has already captured over 190 million active subscribers to whom it can market any new business.

These are five things to consider before buying Netflix stock:

1. Understand the Company 

While it may make sense to invest in a company you know and whose products you use — as suggested by legendary investors, such as Peter Lynch and Warren Buffet — this alone may not be enough. You need to study the company’s fundamentals to be sure that it is in a good financial state. That you have been streaming movies with Netflix does not mean you should invest blindly without finding out whether the company is making money.

2. Understand the Basics of Investing

You must learn the basics of investing before going feet first into the market. It will save you from a lot of stress. Learn about risk management, money management, and diversification. It may be wise to trade with a demo account for some time before trading with real money. When you eventually start committing real money into the market, test the waters with a small amount first.

3. Carefully Choose Your Broker

The first thing to consider in a stockbroker is the regulation status in your country of residence and the country where the stock you want is traded. In the case of Netflix, the regulator is the US Security and Exchange Commission (SEC). Being regulated in your country of residence can offer some protection from financial services compensation schemes in your country in case the broker becomes insolvent. Also, consider the broker’s trading commissions, trading platforms, payment methods, and customer support service.

4. Decide How Much You Want to Invest

The golden rules are to never invest more than you can afford to lose, and do not use borrowed funds to invest. As a beginner, stay away from leverage because it can magnify your losses. Determine the percentage of your capital you will allocate to Netflix and how you want to invest the money. You may want to practice dollar-cost-averaging by gradually scaling in as the price falls.

5. Decide on a Goal for Your Investment

What is your investment goal? You need to ask and answer that question. Knowing why you are investing and how long you intend to hold your investment will help you invest without emotions. Are you investing to build your pension fund for retirement? If so, what is your strategy, and when do you plan to sell? It could be when the price reaches a particular level, when the fundamentals no longer stack up, or when you reach a certain age. Whatever the goal is, write it down. You may also want to hold indefinitely and sell as you need.

In summary, Netflix is an entertainment platform and content production company that offers subscription-based streaming and DVD rental service for movies, TV series, and documentaries. You can buy Netflix stock through a stockbroker registered with the Nasdaq Exchange.

If you want to invest in Netflix shares right now, simply sign up for a stockbroker’s stock trading account, fund your account, select Netflix from the list of stocks on the broker’s platform, and place an order to buy the stock.

However, if you’re not yet ready right now, keep educating yourself by reading our other guides on our website until you are ready to invest. Try “paper trading” using your stockbroker’s demo account to familiarize yourself with the broker’s trading platform.