An investor wanting to bet on streaming needs to know how to invest in Netflix (NFLX -1.70%) stock. Netflix is the largest player in the streaming industry today despite a major increase in competition. The company has maintained its market-leading position by constantly evolving.
NASDAQ: NFLX
Key Data Points
Netflix started out as a DVD rental service when it was founded in 1997. The company would mail a customer several DVDs, and the customer would pop them back in the mailbox when they were done. The video rental industry was upended by this innovative business model. Blockbuster, a video rental chain that once had thousands of locations, was unable to adapt to meet the new competition and ultimately failed.
Netflix added streaming to its service in 2007, although it initially came with strict limits and a lackluster content selection. The company eventually went all-in on streaming, recognizing that the DVD rental business was not the future. By the start of 2013, the company had roughly 34 million paying members.
Netflix pivoted yet again in the early 2010s, betting that its initial strategy of licensing content for streaming would not gain it a durable competitive advantage. The company began producing its own content, spending huge sums to bring original shows and movies to its streaming service. Combined with a vast expansion to international markets, the strategy has helped Netflix grow its paying subscriber count to nearly 300 million.
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How to buy Netflix stock
Since Netflix is a publicly traded company, you can buy shares of Netflix in any brokerage account. If you don't have a brokerage account, there are plenty of top-rated brokers and trading platforms to consider. Here's a step-by-step guide to buying Netflix stock:
- Open your brokerage account: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Should I invest in Netflix?
There are plenty of good reasons to invest in Netflix stock:
- You want to bet on the streaming industry and its continued market share gains from linear TV.
- You believe that Netflix will be able to maintain its dominance even as competitors invest heavily in streaming platforms of their own.
- You want to invest in a company with a history of quickly and boldly adapting to changing market conditions.
- You think Netflix's original content gives it a competitive advantage.
- You believe that Netflix still has plenty of room to grow as it expands in international markets.
- You see long-term growth opportunities beyond streaming, like the company's slow push into the video gaming market.
Although Netflix stock looks like a promising long-term investment, it's important to remember that investing in individual stocks is risky. Any number of things could go wrong for Netflix, and the stock could suffer as a result.
Potential Netflix investors also need to consider the valuation. Netflix is valued at roughly $530 billion as of mid 2025, which puts the price-to-earnings ratio at about 59. The S&P 500 trades at a P/E ratio of around 29, so Netflix stock is priced at a hefty premium. This valuation implies that investors are betting that Netflix can rapidly grow earnings over the next few years, something that is far from a guarantee.
P/E Ratio
Is Netflix profitable?
Yes, Netflix is profitable. In Q1 of 2025, Netflix reported profits and revenue that exceeded forecasts. They saw a 12.5% year-over-year increase in revenue, coming in at $10.5 billion.
Revenue
Does Netflix pay a dividend?
Netflix does not pay a dividend to its shareholders. While Netflix is profitable and producing plenty of free cash flow today, that hasn't always been the case. The company's decade-long original content push was an expensive endeavor that took time to pay off.
Starting in 2015, Netflix started investing so heavily in original content that free cash flow nosedived deep into negative territory. Right before the pandemic, free cash flow was running at an annual loss of about $3 billion. There was simply no money for a dividend as Netflix bet the farm on its original content strategy.
A surge in subscribers during the pandemic and a leveling-off of content spending has since pushed free cash flow positive. While Netflix could certainly afford to pay a dividend, such a move looks unlikely anytime soon. Netflix has a lot of competition to contend with, and growth has been harder to come by in the post-pandemic period. The company will likely continue to prioritize investing in content and growth instead of paying dividends to shareholders.
Fiscal Quarter
Will Netflix stock split?
Netflix has split its stock twice. The first stock split came in 2004, just a couple of years after the company went public. The second split came in 2015.
While Netflix hasn't announced any additional stock splits, it's certainly possible the company could announce a third stock split down the road. Shares of Netflix traded above $400 in mid-2013, making them less accessible for investors with small amounts of money to invest. The ability to buy fractional shares, which allow investors to buy less than a single share, makes this less of an issue and perhaps makes it less likely that Netflix will feel the need to split its stock again.
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The bottom line on Netflix
Netflix has a decades-long track record of reinventing itself in a rapidly changing media industry. The company isn't afraid to make massive investments if the long-term payoff makes sense. Following a pandemic-era surge in subscriber growth, Netflix is solidly profitable and at the top of its game in terms of producing original content. While competition will put pressure on Netflix, the stock is a great way to bet on the future of the streaming industry.
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