The Tradu Netflix Stock Trading Guide
Understand this large-cap stock and how you can use it to support your trading strategy.
About Netflix
Netflix, Inc. is a US company that provides entertainment services. Reed Hastings and Marc Randolph created Netflix in 1997. It originated as a DVD-by-mail service, but the company transitioned to a subscription video-on-demand service in 2007. It has since become the most subscribed video streaming service in the world.
This global service is available in almost every country worldwide, allowing viewers to stream video on demand through paid memberships. You can watch a range of Netflix original films and TV series as well as third-party digital video content. Today, Netflix has a presence in the tech, entertainment and media industries and operates a range of wholly owned companies.
Netflix sells shares to the public and the wide influence the service has on popular culture means that the Netflix share price tends to fluctuate. Netflix stock was opened in 2002 with an IPO at $1 per share on NASDAQ. It's listed under the ticker NFLX.
What affects the share price of Netflix stocks?
Several factors can affect the stocks and share prices of Netflix:
- Public image: Public perception can dictate the NFLX stock price. In 2020, Netflix was named the most reliable streaming service in a survey by American data analytics company J.D. Power. This was during a period of share price growth that saw Netflix reach its highest ever price of $679.33 in November 2021.
- Wider industry issues: Events such as the Hollywood writer and actor strikes in 2023 have resulted in shows being postponed or cancelled, having a knock-on impact on streaming services that rely on a steady flow of new shows to satisfy high user demand.
- Changes to the model: Announcements such as membership fees increasing and a crackdown on password sharing could pose a threat to the share price of Netflix.
- Global affairs: The Covid-19 pandemic resulted in record-breaking growth for Netflix, but the aftermath saw this effect wear off over time. And as Netflix continues to expand beyond Western culture, there are questions being raised about how globalisation of the brand will pan out when exposed to regional politics.
- Subscriber levels and views: Trends of subscriber increase or decline can be influenced by several factors, including seasonal changes or the release of a popular film or TV series such as Stranger Things. Netflix also launched a cheaper advertising tier subscription in 2022 which helped it add nearly six million subscribers in Q2 of 2023.
- Competitors: As with many other corporations, there's always a threat that competitors will steal a greater market share. The streaming platform space is becoming increasingly crowded with the likes of Hulu, Disney+, HBO Max and Apple TV+ gaining popularity in recent years.
How Can I Trade Netflix Stocks?
You can trade NFLX stocks in several ways with Tradu. Trade via contracts for difference (CFDs) if you want to opt for derivatives that don't require you to take full ownership of the underlying asset. This way, you can speculate on the Netflix share price rising or falling to align with your analysis.
Otherwise, you can invest in Netflix stocks, which means you take full ownership of the asset.
Trading Netflix stock
Contracts for difference (CFDs): This approach allows you to exchange the difference in the Netflix stock or share price with a buyer or seller. The calculation is based on the difference between when the contract opened and when it closed.
You can execute these approaches with leverage. This means that you can increase your market exposure with a smaller deposit. However, this in turn can heighten losses.
How to invest in Netflix stocks
Unlike CFDs, investing in NFLX stock means you'll take ownership of the underlying asset. This method is a long-term approach often with less volatility. You'll buy Netflix stock in the hope that there will be a rise in prices for you to make a profit.
It's important to note that you cannot use leverage when trading stocks directly, unlike with financial derivatives. This means there may be fewer opportunities to profit, particularly in a bearish market.
Is Netflix stock right for me?
Wondering whether Netflix is a good stock to invest in? As with any type of trading, there are risks to consider. Trading or investing in Netflix stocks and shares presents several pros and cons, which we've highlighted below.
Pros of trading Netflix stock
- Market leader: Netflix is profitable and continues to dominate the streaming industry by evolving over time. Bear in mind that this makes the stock expensive relative to earnings and there's a threat of competition.
- Leverage: If you choose to trade using leverage, this can increase your market exposure and resulting profits.
- Trade both ways: When you trade via CFDs, you can speculate on the price rising or falling, which means you can profit from both bearish and bullish markets.
Cons of trading Netflix stock
- Market volatility: The market and wider economy can benefit or compromise your position depending on how it behaves. It's worth studying past data and forecasts to understand how your Netflix stocks might be affected.
- Diversification: Individual stocks when used in isolation can be limiting when it comes to diversification. To reduce this risk, many trade across varied markets to diversify their portfolio.
- Leverage risk: While trading with leverage can increase your market exposure, it can also put you at risk of greater losses if the market goes in a less favourable direction.
How to start trading Netflix stocks with Tradu
When it comes to knowing how to invest in Netflix stock, we have you covered with our simple process.
- Open a trading account today: All you need to do is provide us with basic details and we can get you up and running in minutes.
- Decide your strategy: Pick your Netflix trading strategy based on your goals, risk tolerance and capital.
- Study the market: Watch our live price charts like a hawk. Using historical data and innovative tools, you can study the market and cherry-pick the best opportunities.
- Execute a trade: Once you've spotted an opportunity and selected your strategy, it's showtime! Enter your position and keep watching our price charts to find your exit point.
- Make the most of our experts: We're here to help. Reach out to our customer support team for help 24/5 or head to our learning resources hub to boost your trading skills
- Diversify your portfolio: Hedge against risk and add different markets and asset classes to your portfolio.
