How To Buy Netflix (NFLX) Stocks & Shares

Netflix, the world’s largest streaming service, has seen a sharp reversal in its share price after revealing it has suffered its first decline in paid memberships for more than 10 years.

Shares in the company plunged by around 35% to $226 earlier this week, as investors braced themselves for the company to lose millions of subscribers over the coming months.

Netflix has proposed a revival of its business model and the launch of a discounted subscription service featuring adverts for the first time. But that hasn’t prevented hedge fund Pershing Square Capital Management from offloading its stake in the company at a reported £300 million loss.

Will other investors follow suit? Or do they sense an opportunity to buy into one of the media sector’s best-known names at a bargain basement price?

Here’s what you need to know about buying – and selling – Netflix shares.

Note: investing in companies comes with no guarantees. When buying company shares, it’s possible to lose some, and very occasionally all, of your money.

That said, over the long term – and by this we mean a bare minimum of five years (and preferably much longer) – chosen wisely, it’s possible for shares-based investments to produce far superior returns to those available from, say, ultra-safe, low interest-paying deposit accounts. Especially once inflation has been factored in.

How to buy stock

There are several steps to take once you’ve satisfied yourself about the reasons for buying shares in a particular company.

1) Open an account

Whether you’re a seasoned share trader, or someone who is brand new to stock market-based investments, if you want to buy shares in Netflix, you’ll need to open an account with a regulated brokerage.

Stockbroking services for DIY investors come in a range of guises – from online investing platforms run by some of the biggest names in financial services to investment trading apps that work off your smartphone or tablet.

Before opening an account:

• keep your ultimate financial goals in mind
• be prepared to ride out stock market ups and downs
• aim to keep trading costs to a minimum
• remember that share investing can prompt tax charges, for example, when selling stock.

Before buying any shares ask yourself:

• should I take financial advice?
• am I comfortable with the level of risk?
• what’s my budget?
• can I afford to lose money?
• do I understand the company in which I’m looking to invest?
• am I protected if my platform provider/adviser goes out of business?

2) Where is Netflix traded?

The ticker symbol for Netflix is NFLX. The company is traded on the Nasdaq in the US. Nasdaq’s trading hours are 2.30pm – 9pm (UK time) Monday to Friday.  

You should be able to buy US shares through most brokerage accounts. Buying shares in US dollars incurs a foreign exchange fee (typically around 1%) unless you fund the purchase from a US dollar account. 

Most brokerages also charge a slightly higher transaction fee for buying US, rather than UK, shares although it’s worth comparing the fees charged by different brokers if you plan to trade US shares regularly.

You will be asked to complete a W-8BEN form (valid for three years) which allows you to benefit from a reduction in withholding tax for qualifying US dividends and interest from 30% to 15%. Holding US shares also carries exposure to foreign exchange risk. If the pound strengthens against the dollar, your shares will be worth less in sterling (and vice versa).

As with UK shares, any profit on US shares will be subject to Capital Gains Tax, unless you hold the shares in an Individual Savings Account or Self-Invested Personal Pension.

3) Do your research

To find out more about Netflix, go online and visit the company’s investor relations page.

4) What’s your investing strategy?

People tend to invest either with a lump sum purchase, or via smaller amounts over time.

The latter method is often referred to as a means of ‘pound cost averaging’, a stock market hack which may help you pay less per share on average over time. Rather than waiting to build up a lump sum, it means an investor’s money is being put to use in the market straightaway.

5) Place an order

Once you’re ready to buy shares in Netflix, log in to your investing account or trading app. Type in the ticker symbol NFLX and the number of shares you want to buy, or the amount of money you’re prepared to invest.

6) Review Netflix’s performance

Whether your share portfolio is crammed full of companies or holds only a handful of stocks, it’s vital you review how each component is performing on a regular basis: monthly, quarterly, or annually.

Doing this gives you the opportunity to review performance and ask if any adjustments to your holdings are required – to maintain the status quo, buy more stock, or sell existing shares.

How to sell stock

When you want to sell your holdings, log in to your investing platform, type in the ticker symbol and select the amount you want to sell.

If you’ve made a substantial profit, you may be liable to Capital Gains Tax (CGT) when you come to sell your holdings, especially if your shares were held outside a tax-exempt wrapper such as an Individual Savings Account.

The CGT tax-free allowance for the tax year 2022-23 is £12,300. Find out more here about CGT, rates and allowances.

How to invest in Netflix via a fund

Investing directly in individual stocks will, hopefully, be a profitable experience. It may also qualify you for shareholder perks specific to the company in question.

It can also leave you vulnerable to stock market volatility and unforeseen swings in share prices. Nowadays, even a solo tweet – let alone a full-blown geo-political conflict – can send shock waves through the stock market.  

That’s why, financial experts recommend that most people invest in a diversified mix of asset classes and funds that hold hundreds, if not thousands, of company shares.

Being a large component of the Nasdaq index, Netflix is found in many ‘active’ and ‘passive’ (index tracker) funds incorporating a bias towards the US.