Like many tech companies in 2022, the stock price of Netflix (NASDAQ:NFLX) suffered. Unlike some other big tech companies, though, the company spent most of the year increasing its stock price. After one massive price drop from $348 on April 18 to a low of $166 by the start of May, the Netflix stock price increased for the rest of 2022.

The Netflix share price has rallied so much since it lost around half its value that it is now down just 16.69% in the 12 months to February 2022. So is Netflix back for good, or will investors get spooked again?

We’ll cover everything you need to know about how to buy Netflix stock in 2023 below.

Step 1: Decide Where to Buy Netflix Stock

The first step to consider when learning about investing in stock online is to choose a suitable broker. Netflix is a large-cap stock listed on the NASDAQ exchange, so you can choose any US-based brokerage site for this purpose.

However, research is paramount in this department, as a broker should offer low fees, small account minimums, and support for your preferred payment type.

Here is our top broker for buying Netflix stock.

Webull - Buy Netflix for as Little as $5

webull logoWebull offers one of the most popular stock apps in the US. Available on both iOS and Android devices, this fully-optimized mobile trading platform gives you access to over 5,000 US stocks, including Netflix. You won't pay any trading commissions to buy Netflix stock here.

Moreover, you won't need to risk too much capital as Webull requires a minimum investment outlay of just $5 when buying equities. If you consider yourself a complete novice in the stock investment space, you might also like that Webull does not have a minimum deposit requirement in place. It's easily one of the cheapest ways to begin trading stocks.

All that being said, Webull does come with a number of clear drawbacks. First and foremost, you won't be able to fund your investment account with a debit/credit card or e-wallet. If like many Americans, you choose to make a deposit via a domestic bank transfer, you will be hit with a rather hefty fee of $8. However, ACH deposits are still free, making that the best payment method for most.

Webull

One drawback with Webull is that it does not give you direct access to international stocks. That's not a problem for buying Netflix stock but could be if you're looking to diversify internationally. Nonetheless, we do like Webull for its margin trading accounts - which give you access to additional capital.

We also like Webull for its retirement account support. In addition to stocks, Webull gives you access to US-listed ETFs and options. The platform also offers more than a dozen digital currencies - which include everything from Bitcoin and Litecoin to Uniswap and Shiba Inu. Users can invest in cryptocurrencies on WeBull for as little as $1.

Number of Stocks 5,000+
Deposit Fee ACH - free / Bank wire - $8
Fee to Buy Netflix Stock Commission-Free
Minimum Deposit $0

Your capital is at risk.

What is Netflix

Although Netflix is still arguably a growth stock with an emerging business model, the firm was actually formed in 1997.

  • Back then, Netflix was pioneering a completely different form of subscription service - DVD rentals to your door.
  • The main concept with Netflix during its early years was that for a monthly fee, users could request to have a certain number of DVDs mailed to their homes.
  • Then, when the customer was finished watching the content, they would return the DVD and get a new one sent out from their list automatically.

Management at Netflix had other ideas in mind, and DVD rentals were just a stepping stone to something much bigger. The company pioneered the concept of an online video streaming service, negating the need for mail and DVDs and creating one of the most valuable industries we have today.

Today, Netflix is home to over 230 million subscribers from all corners of the globe. The streamer has since expanded into original content, with popular titles including House of Cards, Squid Game, The Queen's Gambit, Ozark, and Stranger Things.

This is in addition to its conventional library of movies and TV series created by external producers.

Step 2: Is Netflix Stock a Good Investment?

Since its IPO all the way back in 2002, Netflix has had a stratospheric rise. After taking into account the two times Netflix split its stock, the original stock price for the company was just $1.07. Of course, back in 2002, you'd be hard-pressed to find many people who had heard of Netflix.

Netflix really took off when it pioneered streaming films and TV online and became one of the most sought-after tech stocks. That's where the majority of its all-time stock price growth of 26,000% has come from. However, those who invested in Netflix recently haven't necessarily enjoyed such gains.

The Netflix stock price today of around $313 is less than half what it was at its peak of $690 per share in 2021. The last year has been tough for the company, with the likes of Amazon Prime, Disney+, Apple TV+, and HBO Max all chipping away at Netflix's market share. Netflix also hasn't helped itself with unpopular moves such as limiting password sharing and the release of its poorly received ad-supported streaming tier.

That said, Netflix still sits at the top of the streaming mountain. Despite the competition from other platforms, Netflix still dominates all of the important statistics. It has by far the highest average revenue per user (ARPU) of all the streaming services, it has the largest and most loyal subscriber base, and it reigns supreme in the all-important streaming viewing time metric.

The last one is key to Netflix's future growth. The service with the highest number of viewing hours has the most to gain from advertising. The launch of Netflix's ad tier may have stumbled due to users not having access to all of the company's content, but it's the biggest potential area of growth for the streaming service.

Other streaming services may be eating into Netflix's share of the video-on-demand pie, but the original streaming company still has a gargantuan slice. Whether or not Netflix is a good investment will depend on the success of its ad-supported streaming tier, its ability to keep its user base loyal, and whether it can maintain its current position as the default subscription for most people.

Netflix Stock Price History

Netflix became a public company on May 23, 2002 - opting to list on the tech-heavy NASDAQ exchange. The firm opened at $15 per share, though Netflix has since executed two stock splits. The first took place in 2004 at 2-for-1. The second was initiated in 2015 at 7-for-1.

As a result, for the purpose of analyzing the growth of Netflix stock since its IPO, this gives the firm an original listing price of $1.07. Since its IPO, Netflix has gone on to become a large-cap stock. In fact, in late 2021, Netflix stock hit an all-time high of $690. This represents a gain of over 64,000% from 2002 to 2021. Even with the downturn in 2022, that gain is still a very impressive 26,000%, if holding the stock in March 2023.

Netflix all time price history chart

This is yet another example of how lucrative growth stocks can be when you enter the market early. That being said, the aforementioned downturn for Netflix stock means it sits well below its $690 peak today. In fact, the firm declined to a 52-week low of $162 in the last 12 months. However, it has recovered significantly since then, nearly doubling in value to around $313 today. It hasn't recovered completely, though, Netflix is still down by around 5% over the last five years due to the amount it lost in 2022.

In comparison, the NASDAQ Composite is up by more than 55% over the past five years. Therefore, when compared to the broader market over a five-year period, Netflix stock is performing poorly.

EPS and P/E Ratio

As per its most recent quarterly earnings report, Netflix is carrying a diluted EPS of 9.14. While that's nearly triple the pre-pandemic 2019 EPS of 3.85, it's down on the 2021 peak of 10.68.

In terms of its price-to-earnings (P/E) ratio, as of March 2023, Netflix is at 34. That's more than double the 2022 low of 15.54 when the stock price dropped dramatically but still close to the lowest Netflix's P/E has been in the last decade.

In comparison, major competitor Disney is carrying a P/E ratio of over 54. Amazon, which is another key competitor in the streaming service space, is also high at a P/E ratio of over 97. However, HBO Max owner Warner Bros. Discovery remains by far the lowest with a P/E of just 7.

Market Capitalization

The market cap of Netflix in March 2023 is around $139bn. Its lowest point in recent years, after the price drop in May 2022, was $73.96bn. At its all-time high in October 2021, Netflix had a market cap of $305.91bn

Index Funds

As one of the largest stocks on the NASDAQ exchange, it goes without saying that Netflix is held by a magnitude of index funds. At the forefront of this is the S&P 500.

In terms of ETFs, some of the most prominent funds with exposure to Netflix stock include the Vanguard Communication Services ETF and the Invesco Dynamic Media ETF.

A large variety of ETFs containing Netflix can be purchased via our recommended broker Webull.

Netflix Stock Dividends

Although Netflix has been a public company for over two decades, the firm has never paid a stock dividend. This is no different from other leading tech stocks - such as Amazon and Facebook.

Companies that are growing quickly, like tech stocks, rarely pay dividends as they plow their profits back into continuing to grow the company. This means that while you may not receive a regular payment from your investment, if you're planning to hold stocks like Netflix for the long term, you may still end up ahead.

Read More: If you seek regular income on your equity investments, read this guide to discover dividend stocks in the market.

Netflix Stock Price Forecast

Now that we've considered the current and past health of Netflix as a company, it's time to look toward the future. We want to consider the stock forecast for Netflix over the next couple of years and into 2025, 2030, and beyond.

Netflix's biggest threat in the coming years is the growing competition it faces. It seems like nearly every month, there's a new streaming service from one place or another. Unlike in the early days of Netflix, when the company would license as much content as it could, that's no longer possible for the company.

Studios like Disney, Warner Bros, and Universal all have their own services filled with their own content, so Netflix licensing it is off the table. One of the most watched shows on Netflix for years was The Office; however, the company was only licensing the show from Universal. When Peacock was launched, Universal made the show exclusive to its own platform, which generated a massive amount of growth.

This has meant that Netflix has been forced to spend enormous sums of money on its own originals to compete with the new services. This has worked for the company in the cases of shows like Stranger ThingsSquid Game, and Wednesday, but its future success hinges on its ability to keep producing this type of high-quality content. Netflix doesn't have a century of backlog to pull from like Disney, Warner Bros, and Universal do.

That said, Netflix has a sizeable lead over the competition. It's the most watched service, the most subscribed to, and generates the highest average revenue per user.

If Netflix can translate this lead into higher revenue and profits through must-watch content and its new ad-based subscription tier, the company stands to grow like never before.

A Year of Recovery

After the massive stock price drop in 2022, there were concerns that Netflix would never again meet its peak valuation. That was proven wrong, slowly but surely, throughout the rest of 2022 as Netflix recovered from a low of $166 in May to $294 by the end of the year. In 2023, Netflix stock has continued to climb, with the company up nearly 6% year-to-date as of March.

Now the question is, how high will the company continue to rise?

Netflix Dominates Market Share

In the streaming space, nobody has been able to overcome Netflix's impressive market share. As of Q3 2022, Netflix held the largest share of the streaming market at 21%. Direct competitors HBO Max and Disney+ held 15% of the market each. Amazon Prime, which includes delivery, cloud services, and music as part of the subscription, had a 19% market share.

The market breakdown is bigger when it comes to viewing hours. As of September 2022, Netflix had a 19.8% share of viewing time, according to Nielsen, which was the most of any paid service (YouTube accounts for 21.7%). Second place went to Hulu with 10.3%, Amazon Prime, despite its high subscription rate, was in third with 7.9%, Disney+ at 5.1%, and HBO Max with 3.5%.

So it comes as no surprise that Netflix has the lowest churn rate of any streamer. The high viewing time compared to the competition suggests that for many people, Netflix is still the default service, while other options may be added or taken away more easily.

With the streaming industry still growing year-on-year, Netflix is in a prime position to grow its customer base in the coming quarters.

Strong Focus on Quality Content

Management at Netflix has made its intentions clear in terms of focusing on quality over quantity. At the forefront of this is allocating resources to Netflix Originals.

Not only does this allow Netflix to differentiate itself from its competitors, but its Original content is more profitable for the company. This focus on quality hasn't gone unnoticed, with Netflix cleaning up at the Emmy awards last year.

Netflix's original content also regularly tops the weekly charts of most-watched throughout each year. While Disney+ and HBO Max tend to take the limelight every now and then with shows like The Mandalorian and The Last of Us, nobody has been able to match the massive variety of content that has found success on Netflix.

Debt Levels are Manageable 

Netflix carries in the region of $14 billion worth of debt on its balance sheet. While, at first glance, this might concern potential stockholders, there are two important considerations to make.

First and foremost, Netflix has $6 billion worth of cash on its books. Second, and perhaps most importantly, its debt isn't due until starting in 2025, when $7 billion will need to be paid over three years. This should give Netflix sufficient time to reshape its finances as Netflix completes its transition from a content licensor to a major studio.

P/E Ratio

The current P/E ratio for Netflix of 34 makes the company close to the best value it has been for over a decade.

If the company continues on its stock recovery trajectory, 2023 could be one of the last years to buy Netflix stock at a relatively good value.

Risks to Consider When you Buy Netflix Stock

Before you buy Netflix stock, it is imperative that you consider the risks of investing in this firm.

The key risks that we identified are discussed in the sections below:

Subscriber Numbers 

Netflix suffered its first-ever subscriber loss in Q1 2022, which was a shock to investors and part of the reason the stock price plummeted. 200,000 subscribers left the service, with a million more to follow in Q2 2022. Despite these losses in the first two quarters, Netflix ended the year with a net positive increase of just over 9 million YoY by Q4 2022.

The concern going forward for Netflix is whether the subscriber losses were one-offs or part of a wider trend. It's too early to say whether Netflix's subscriber base will peak, which is a risk for the company if it does.

Growing Competition  

Although Netflix is still the market leader in the content streaming industry, it has some serious competition chipping away at its dominance. While you also have the likes of HBO Max, Paramount+, Hulu, and Discovery+, the biggest threat to Netflix are Amazon and Disney.

  • Amazon, for instance, has over 200 million paying customers on its Prime subscription service, though not all are subscribed for video.
  • This is just 20 million fewer than Netflix has on its books.
  • Most importantly, Amazon has a seriously robust balance sheet with vast cash reserves on hand.
  • Furthermore, Amazon isn't over-exposed to the video streaming industry like Netflix.
  • The firm has a diversified portfolio of products and services, which covers everything from online retail and home deliveries to consumer electronics and cloud storage.

As for Disney+, the platform already has over 161 million paying subscribers, even though it only launched at the end of 2019.

Just like Amazon, Disney has a diversified business model that covers everything from broadcast networks and original movie content to theme parks and cruises.

2025 Debt Obligations

It is important to recognize that while Netflix's balance sheet looks okay today, that might not be the case as the company moves into 2025.

As we mentioned earlier, this is the period that some of Netflix's most notable debt obligations will need to be repaid. Over a three-year period from 2025, more than $7 billion of debt will mature.

Potential investors will want to make sure they're following news about Netflix stock to see how the company handles that debt over the next two years.

Is Netflix Stock a Buy?

It goes without saying that Netflix stock has experienced a major correction in the last year, with the firm hitting 52-week lows of $162. This amounts to a decline of almost 70% from its prior all-time high of $690.

Netflix stock then had a big recovery to where it is today in March 2023, at around $313. Analysts still think it has a ways to go as well, Netflix currently has an average 12-month price target of $357, suggesting it is around 14% undervalued.

Of 42 Wall Street analysts, Netflix stock is also generally rated as a strong buy or a buy, with 20 recommending the former and two the latter. It is worth noting that 17 analysts rate the company as a hold.

If Netflix can continue to hold off the competition, increase subscribers and revenue with its new ad-supported tier, and maintain its Netflix Original quality, it could be a great buy in 2023.

Conclusion

That concludes everything you need to know about buying Netflix stock for your portfolio. With Netflix stock growing quickly since its price fell rapidly in April/May 2022, now could be one of the best times in years to buy into the premiere streaming company.

Investors who are confident in Netflix's ability to maintain its market share advantage and increase revenue via ads might not have a better time to buy shares of the company. We recommend using Webull to buy Netflix stock for its 0% commission, ease of use, and great trading tools.

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