Whether you are obsessed with the latest show or whether you love movies, Netflix has not revolutionized how we view television.
Today, Netflix has 222 million paying members in 190 countries. Since its initial public offering (IPO) in 2002, the share price of NFLX has skyrocketed. Consider this: Netflix had a market cap of $ 3.9 billion ($ 3 billion USD) in January 2010, compared to today’s $ 195 billion ($ 150 billion USD).
How to Buy Netflix (NFLX) Stock
1. Select the brokerage
You need a brokerage to invest in Netflix or any other stock. Brokers are the intermediary between you and the stock market, meaning they execute your transactions, buy and sell shares. You can use a broker to invest for long-term goals such as retirement or for short-term gains.
A wide range of brokerage options are available, including full-service brokers and robo-advisors. Generally, look for a broker that offers low fees and minimum amount of investment so you can start investing right away. You can use our options for the best investment apps and the best online brokers to kickstart your search.
2. Open an account
Depending on the brokerage you choose, you may have several different account options. Brokers can offer RRSPs for retirement, RESPs for saving your child’s education, and TFSAs for raising your personal savings tax-free.
- Retirement Accounts. If you choose to open a registered retirement savings plan, you may receive tax benefits when you save for retirement. But RRSPs come with a big limitation: withdraw money before the end of the 71-year-old year, and you’ll have to pay withholding tax, as well as income taxes that begin at any age you withdraw the money.
- Taxable accounts. Tax brokerage accounts may not offer any tax benefits, but they do have some benefits. You can withdraw money at any time, for any reason, without any limit on how much you can invest, giving you the flexibility to access your investment returns.
3. Research Netflix
Before investing your money in Netflix or any other stock, you need to do your homework. If you are going to buy shares, you need to know the basics of the company and make sure you have a business model that you think will succeed.
Like all publicly traded companies, Netflix is required to file financial statements with the US Securities and Exchange Commission (SEC). You can view its annual reports and quarterly financial statements on its Investor Relations site.
When reviewing those documents, keep in mind the following factors to help you decide how much money to invest:
- Volatility: Netflix’s stock price has fluctuated a lot over the past few years. In 2021, its price was more than $ 887.08 ($ 682 USD), and as of March 2022, it fell to about $ 429.27 ($ 330 USD). Netflix’s annual report warns that its price will continue to volatile due to factors beyond its control.
- Price per share: NFLX is not expensive on a per-share basis like some high-flying tech stocks. Some brokers allow investors to buy partial shares — that is, the ability to buy a slice of the same stock ratio — but others require you to invest enough money to buy a full share. If so, using a strategy like dollar cost averaging can be more challenging because you need to save money before you buy a share.
- Competition: At one time, it was about the only streaming video service out there, but today Netflix is facing stiff competition in the streaming space. For example, when NBC launched Peacock, it pulled episodes of The Office and Parks and Recreation from Netflix and its Marvel movies and shows when Disney launched Disney +. These kinds of competitors, even Crave in Canada, are pushing the company to spend more to produce the original content.
4. Place the order
If you decide to buy Netflix stock, open your trading platform of choice and enter Netflix’s ticker symbol – NFLX and how many shares you want to buy. If you are using an investment app that offers partial equity investments, you can enter the dollar amount you want to invest in Netflix instead.
You can usually choose to place an order as a limit order or a market order. When market orders are placed during normal trading hours, they are processed immediately at current prices. Conversely, limit orders are processed only when the stock reaches the price you set, and may be a better option if you expect the price to drop in the near future.
Netflix is traded on the Nasdaq Stock Exchange, the world’s second largest stock exchange. Nasdaq’s trading hours are Monday through Friday at 9:30 am and 4:00 pm ET. The Nasdaq has a pre-market and post-trade beyond its core periods.
5. Note the currency conversion fee
Buying US stock from Canada means converting Canadian dollars to US dollars (and when you sell) unless you have a US dollar bank account in the Bank of Canada and only US stocks with American funds. Otherwise, you will be charged between 1% and 4% of the value of the stock on both sides of the transaction from your brokerage as part of your currency conversion service.
In addition to reserving US dollars for US stocks, the only way to bypass these fees is to manage Norbert’s Gambit.
This is called gambit when you buy an interlisted stock or ETF on American and Canadian stock exchanges. You buy Canadian shares of that stock or ETF, then you ask your brokerage to “journal over” your Canadian shares and convert them into American shares of the same stock, then you can sell your American shares in US currency and use US dollars without converting any currency Or the result of buying an ETF. You pay a commission for both transactions, but save on conversion fees.
6. Monitor the performance of NFLX
Even if you plan to hold your Netflix stock in the long run, it is a good idea to periodically review your investment performance. You can compare its performance to a stock market index like the S&P 500.
If you have multiple investment accounts with different brokers, you can use the Investment Portfolio app to manage all your accounts in one place.
6. Have an exit plan
Whether you want to hold your Netflix shares for a few years or even decades, the time comes when you decide to sell your shares.
As you buy stock, you can sell your shares by entering your broker’s platform and typing in the ticker symbol and the amount you want to sell. You can sell it at its current price or you can order to sell only when the stock reaches a certain price.
If your investment makes a profit, you may be liable for capital gains taxes, so consider talking to a tax professional about how to plan those taxes before placing any sales orders.
When it comes to Canadians and taxes, if your US investment generates a dividend, you are subject to a 15% withholding tax until you file a W-8 BEN with your brokerage (30% withholding tax if you don’t). . If your investment vehicle is under RRSP you will not be taxed by the IRS because this particular registered account is recognized by the US, not for every registered account in Canada.
As long as the company in question does not own US real estate as their main asset, you will only have to pay capital gains on your investment growth on your Canadian income tax. With Canadian capital gains, you only pay 50% of the growth value of the investment.
The only other scenario is that if you make $ 5 million USD on your US-based investments, you probably have to pay estate tax to the IRS when you die.
Other ways to invest in Netflix
Netflix’s performance in the last 10 years has been unstable. While it has been experiencing incredible growth for several years, its price has dropped by 25% in the last 12 months.
With that volatility in mind, you may want to consider investing in index funds or exchange-traded funds (ETFs) rather than individual stocks. These funds invest in hundreds or even thousands of companies simultaneously, giving you a ready-to-diversified portfolio.
As a large company, many funds can give you exposure to Netflix. Over 250 ETFs own Netflix as one of their holdings. In Canada, it includes the BMO Global Communications Index ETF (TSX: COMM).