How To Buy Netflix (NFLX) Stock – Forbes Advisor Canada

Whether you’re obsessive about the most recent present otherwise you simply love motion pictures, there’s no denying that Netflix has revolutionized how we watch tv.

Today, Netflix has over 222 million paying members in 190 nations. Since its preliminary public providing (IPO) in 2002, NFLX’s inventory value has skyrocketed. Consider this: Netflix had a market capitalization of about $3.9 billion ($3 billion USD) in January 2010 in comparison with over $195 billion ($150 billion USD) right this moment.

How to Buy Netflix (NFLX) Stock

1. Choose a Brokerage

To spend money on Netflix—or some other inventory—you want a brokerage. Brokers are the middleman between you and the inventory market, which means that they execute your trades, shopping for and promoting inventory. You can use a dealer to speculate for long-term targets, equivalent to retirement, or intention for short-term earnings.

There are a variety of brokerage choices out there, together with full-service brokers and robo-advisors. In normal, search for a dealer that gives low charges and funding minimums so you can begin investing instantly. You can use our picks for the finest funding apps and finest on-line brokers to kickstart your search.

2. Open an Account

Depending on the brokerage you select, you might have a number of totally different account choices. Brokers will probably supply RRSPs for retirement, RESPs for saving to your youngster’s training and TFSAs for rising your particular person financial savings tax-free.

  • Retirement accounts. If you select to open a Registered Retirement Savings Plan, you will get tax benefits if you save for retirement. But RRSPs include one huge limitation: Withdraw cash earlier than the tip of the yr you flip 71 and also you’ll owe a withholding tax, in addition to the revenue taxes that kick in at no matter age you withdraw funds.
  • Taxable accounts. Taxable brokerage accounts could not supply any tax advantages, however they do have some benefits. You can withdraw funds at any time, for any purpose, with no cap on how a lot you may make investments, supplying you with flexibility in terms of accessing your funding proceeds.

3. Research Netflix

Before investing your cash in Netflix or some other inventory, you could do your homework. If you’re going to purchase inventory, you must know concerning the firm’s fundamentals and guarantee it has a enterprise mannequin you suppose can succeed.

Like all publicly-traded corporations, Netflix is required to file monetary statements with the U.S. Securities and Exchange Commission (SEC). You can view its annual stories and quarterly monetary statements on its investor relations web site.

When reviewing these paperwork, preserve the next elements in thoughts that can assist you determine how a lot cash to speculate:

  • Volatility: Netflix’s inventory value has fluctuated an incredible deal over the previous few years. In 2021, its value was as excessive as $887.08 ($682 USD) As of March 2022, it fell to about $429,27 ($330 USD). In Netflix’s annual report, it cautions that its value continues to be unstable resulting from elements past its management.
  • Price per share: NFLX isn’t as costly on a per-share foundation as some high-flying tech shares. Some brokers permit buyers to buy fractional shares—that’s the power to purchase a proportional slice of a single inventory—however others require you to speculate sufficient cash to purchase an entire share. If that’s the case, utilizing a technique like greenback value averaging will be tougher because you’ll want to save lots of a bit of money earlier than you should purchase a share.
  • Competition: Once upon a time, it was about the one streaming video service on the market, however right this moment Netflix is going through stiff competitors within the streaming house. For instance, NBC pulled episodes of The Office and Parks and Recreation from Netflix when it launched Peacock, and Disney pulled its Marvel motion pictures and exhibits when it launched Disney+. Competitors like this, even Crave in Canada, are forcing the corporate to spend much more to supply unique content material.

4. Place an Order

If you determine to purchase Netflix inventory, open up your buying and selling platform of alternative and enter Netflix’s ticker image—NFLX—and what number of shares you want to buy. If you’re utilizing an funding app that gives fractional share investing, you may enter the greenback quantity you need to spend money on Netflix as an alternative.

You can often select to put the order as a restrict order or a market order. Market orders, when positioned throughout regular buying and selling hours, are processed instantly on the present value. By distinction, restrict orders are solely processed when the inventory reaches a value you set and is usually a sensible choice for those who count on the value to drop within the close to future.

Netflix is traded on the Nasdaq inventory trade, the second-largest inventory trade on the earth. The Nasdaq’s buying and selling hours are Monday by Friday from 9:30 a.m. and 4:00 p.m. ET. The Nasdaq does have pre-market and after-hours buying and selling past its core hours.

5. Watch Out For Currency Conversion Fees

Buying a U.S. inventory from Canada probably means changing Canadian {dollars} to U.S. {dollars} (and again if you promote), except you may have a U.S. greenback checking account at a Canadian financial institution and solely purchase American shares with American funds. Otherwise, you’ll be charged 1% to 4% of the inventory’s worth on each side of the transaction by your brokerage as a part of their service of changing your forex.

The solely different strategy to bypass these charges, moreover reserving U.S. {dollars} for U.S. shares, is to carry out Norbert’s Gambit.

This so-called gambit is if you purchase a inventory or ETF that’s interlisted on American and Canadian inventory exchanges. You purchase Canadian shares of that inventory or ETF, then you definitely ask your brokerage to “journal over” your Canadian shares and switch them into American shares of the identical inventory, you then promote your American shares in U.S. forex and might use the U.S. {dollars} that outcome to buy any American inventory or ETF you need, like NFLX, with out changing forex. You pay fee for each transactions, however save on the conversion charges.

6. Monitor NFLX’s Performance

Even for those who plan on holding onto your Netflix inventory over the long run, it’s a good suggestion to evaluation your funding’s efficiency periodically. You can examine its efficiency to that of a inventory market index just like the S&P 500 to see the way it measures up.

If you may have a number of funding accounts with totally different brokers, you should utilize an funding portfolio app to handle your whole accounts in a single place.

6. Have an Exit Plan

Whether you plan to carry onto your Netflix shares for a number of years or a number of a long time, there’ll come a time if you determine to promote your shares.

As with buying inventory, you may promote your shares by getting into your dealer’s platform and typing within the ticker image and the quantity you need to promote. You can promote at its present value, or you may place an order to promote solely when the inventory reaches a sure value.

If your funding earns a revenue, chances are you’ll owe capital features taxes, so think about speaking with a tax skilled about the way to plan for these taxes earlier than putting any sale orders.

When it involves Canadians and taxes, you’ll be topic to a 15% withholding tax in case your U.S. funding produces a dividend, so long as you file a W-8 BEN together with your brokerage (30% withholding tax for those who don’t). You received’t be taxed by the IRS in any respect in case your funding car is inside an RRSP as a result of this specific registered account is acknowledged by America, which isn’t the case for each registered account in Canada.

You will solely owe capital features on the expansion of your funding in your Canadian revenue tax, so long as the corporate in query doesn’t have U.S. actual property as their primary asset. With Canadian capital features, you’ll solely pay 50% of the expansion worth of the funding.

The solely different circumstance below which you’d probably owe tax is for those who make $5 million USD in your U.S.-based investments, you’ll owe property tax to the IRS if you die.

Other Ways to Invest in Netflix

Netflix’s efficiency over the previous 10 years has been unstable. While it skilled unbelievable progress for a number of years, its value has decreased by 25% over the previous 12 months.

With that volatility in thoughts, chances are you’ll need to think about investing in index funds or exchange-traded funds (ETFs) reasonably than particular person shares. These funds spend money on lots of and even hundreds of corporations directly, supplying you with a ready-made, diversified portfolio.

As a big firm, many funds can provide you publicity to Netflix. More than 250 ETFs have Netflix as considered one of their holdings. In Canada, this will embody the BMO Global Communications Index ETF (TSX: COMM).

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