Where To Buy Netflix Stock
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With inflation showing signs of cooling, and a real possibility that the Federal Reserve will slow, or even reverse, its rate hikes sometime this year, a bull market could be on the horizon. This means that growth stocks could have their time to shine once again.
For the fourth quarter of 2022, Netflix easily beat management's guidance of 4.5 million new customers by adding 7.7 million subscribers during the three-month period. That was great news for the stock, which is up 15% since that Jan. 19 announcement. What's more, it can ease any worries that investors had about Netflix's growth being a thing of the past, especially after the company lost 1.2 million customers in the first six months of 2022.
With shares of Netflix gaining some momentum recently after plummeting in the first half of 2022, some investors might be hoping for a further bump in the stock price when the company reports earnings next Thursday. If revenue, profits, and subscriber growth come in better than expected, the stock could jump.
Addressing the main premise of this article, it's simply impossible to know whether a stock will go up or down after an upcoming earnings report. Guessing the stock's move correctly would likely require anticipating both the key metrics included in the quarterly update and the market's reaction to it. This is, obviously, an impossible task.
So deciding whether or not the stock is a buy before an earnings report isn't about trying to get the perfect entry point to make a quick buck. Instead, investors should simply consider whether or not they believe the stock is a good long-term bet based on all of the available information.
Perhaps an even better reason to like Netflix stock today is the rollout of digital ads on its platform. The company has been working hard on building an advertising business in order to launch an ad-supported subscription option.
With management guiding for strong sequential growth in subscribers in the fourth quarter, and with the ad-supported tier ramping up, the stock's valuation looks quite attractive today. Sure, a price-to-earnings ratio of 28 isn't necessarily cheap. But it's not a bad price to pay for a market leader with a major new catalyst for its top line on the horizon.
Overall, the stock looks like a good buy headed into the earnings report. But for those investors who are bullish on the company but are cautious about the numbers that could be reported in the fourth-quarter update, it might make sense to wait until the earnings report is out before they buy any shares. The other benefit of waiting, of course, is that investors who buy the stock will have more information about Netflix to make their decision.
Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.
Netflix's (NFLX 2.08%) stock jumped 7% during after-hours trading on Jan. 19 following the company's fourth-quarter report. The streaming video leader's revenue rose 2% year over year to $7.85 billion, which matched analysts' expectations. But its net income fell 91% to $55 million, or $0.12 per share, and broadly missed the consensus forecast by $0.38 per share.
The expansion of Netflix's customer base alleviated some concerns about its potential loss of subscribers to Disney+ (NYSE: DIS), Warner Bros. Discovery's (NASDAQ: WBD) HBO Max, and other aggressive competitors. But does it actually make Netflix's stock -- which remains more than 50% below its all-time high -- a compelling buy
Netflix's stock was crushed over the past year, but its business certainly isn't doomed. It's still growing, and it remains consistently profitable as Disney, Warner Bros. Disovery, and other traditional media companies rack up billions of dollars in ongoing losses to expand their streaming media platforms. Netflix generated $1.62 billion in free cash flow (FCF) in 2022, compared to a negative FCF of $159 million in 2021, and it expects that figure to rise to \"at least\" $3 billion in 2023. That impressive liquidity gives it plenty of room of license and produce fresh content or expand its ecosystem with new features.
But at 30 times forward earnings, Netflix is still valued like a growth stock though it remains on track to generate single-digit revenue and earnings growth in 2023. By comparison, Disney -- which is expected to grow faster than Netflix this year -- trades at just 24 times forward earnings. Paramount (NASDAQ: PARA), which is growing slower than both companies, has a much lower forward price-to-earnings ratio of 14.
Based on these comparisons, I believe Netflix is still too expensive because it should be valued like a traditional media stock instead of a tech stock. Its valuation could limit its upside potential this year, so investors should stick with more promising media or tech stocks instead of betting on Netflix's comeback.
By purchasing shares of Netflix, you could potentially make money if the company grows and its shares become more expensive. But investing in Netflix, or any company, carries risks. So it's important to research your investment options carefully and make the right choices when you're getting started in the stock market.
Before you start buying Netflix stock, you should know a bit about the company. Netflix, Inc. is the largest streaming content provider in the world, offering content to more than 193 million paying members spread across 190 different countries around the globe. But the company wasn't always a streaming giant offering innovative original programming.
The company first went public in 2002 at an initial price of $15 per share. When a company goes public, which means its shares first become available for anyone to purchase on a stock market, it's called an initial public offering or IPO.
By February 2004, NFLX stocks hit a price of nearly $72 per share when it issued a two-for-one stock split. Companies split stock to make their share price lower so buying shares is more affordable and shares are easier to sell. The two-for-one split in 2004 meant that investors who owned one share valued at around $72 per share before the split ended up with two shares priced at around $36.00 each. In 2015, the company split again, offering a seven-for-one split so an investor who owned one share now owned seven.
Since its IPO, Netflix has enjoyed an explosive growth rate. In fact, the stock recently hit a new record high of more than $575 per share, with financial analysts estimating it could soon reach a price topping $645 per share. That means if you'd invested $100 on May 23, 2002, the date of Netflix's IPO, you'd now have an investment worth $45,505.39 and you would have earned an annual rate of return of 40.08% (as of July 23, 2020). By comparison, the average stock market return is around 10% annually.
One way to buy shares of Netflix is to open an account with a stockbroker. Brokerage accounts can be opened online and funded with money from your bank account. They allow you to buy and sell on stock market exchanges such as the New York Stock Exchange and the NASDAQ. If you're considering this option, you'll need to know how to choose a brokerage as there are many different ones out there, including Ally Invest, Merrill Edge, Fidelity, and more.
Once you've opened a brokerage account, you'll need to go to its order page and specify how many shares of Netflix you want to buy. You'll also need to input Netflix's stock symbol (NFLX) on the order page and choose between a market order or a limit order.
If you place a market order, you're guaranteed to get the shares. If you place a limit order, it will be filled only if someone is willing to sell their shares at the price you specified. You can only buy shares when the stock market is open, which is 9:30 a.m. to 4:00 p.m. on most business days unless it is a market holiday.
This is the part where you bust out the popcorn just like any time that Netflix is on the schedule. Once your stocks are purchased, then your work is done. Now you relax and let the market do its thing.
Brokerage accounts provide you with the flexibility to buy many different kinds of assets, but some may require a large minimum deposit to open an account and/or charge a commission when you buy and sell stocks. And figuring out how to use a brokerage account and buy stock shares can sometimes be confusing if you're a beginner.
Beyond giving you access to fractional shares of Netflix, Stash can also allow you to build a portfolio of stocks, bonds, or exchange-traded funds. Depending on the type of Stash account you open, you could take advantage of features such as automatic investing on a set schedule or the ability to earn Stock-Back rewards and automatically get shares of stock when using your Stash debit card (if you also have a bank account with the company).
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Netflix stock has performed well in 2020 as the company saw an increase in subscribers due to the coronavirus pandemic. However, because it's already added so many new subscribers and is trading at a relatively high share price, some question how much room there is for the company to continue growing at its record pace.
If you're interested in picking individual stocks, you've put in the work and feel confident Netflix's share price will rise, and you don't already own lots of shares of stock in similar companies, then buying Netflix could be the right option for you. Always remember that there is an inherent risk in the stock market, though. It is possible to lose more money than you invest in stocks.
Before you dive into buying any stock, you might consider talking with a financial advisor or at least making your own detailed financial plan that includes specific goals for your future and a well-thought-out investment strategy. 59ce067264