Netflix (NFLX)

If you’re a high school student looking to win your class stock market game, you’re probably wondering, “What are the top stocks to buy now?” The key to winning the stock market game might be adopting a high-risk, high-reward strategy. While this approach isn’t recommended for long-term investing, it could be your best bet to climb to the top of your class leaderboard. One stock you should seriously consider is Netflix. Let’s dive into why Netflix could help you win.

Netflix has had a wild ride in the stock market, with a steep drop in value this year. At first glance, it might seem like Netflix isn’t doing well, but that’s exactly why it presents an opportunity for those who know how to play the game right. This year, Netflix lost about 1.2 million subscribers in the first half of 2022—far from its pandemic boom, where it gained 26 million subscribers in just the first half of 2020. However, Netflix’s stock price has dropped by 61%, which means it’s cheaper to buy now than it was a year ago.

This is where the idea of momentum trading comes in. To win your class stock market game, you might need to take a short-term, high-risk approach—investing in stocks that have had sharp price drops but have potential for a bounce back. Analysts are expecting Netflix to bounce back in a big way thanks to some smart changes the company is making. For example, Netflix is planning to introduce advertising-supported tiers and crack down on account sharing, which could boost its revenues. According to a survey by Cowen, a research firm, more than 30 million people in the U.S. and Canada are currently sharing Netflix accounts without paying. If just a small percentage of them start paying even a few dollars extra, Netflix’s revenue could soar. “Netflix’s pivot towards advertising and limiting account sharing could lead to a significant boost in its earnings next year,” says analyst John Blackledge.

High-risk strategies like this can work well for short-term trading or stock market games, but they aren’t the best for building long-term wealth. Short-term trading means you’re trying to make quick profits by buying stocks at low prices and selling them when the price rises—just like what you might do in your class stock market game. In contrast, long-term investing is all about putting your money into a diversified portfolio of stocks that can grow steadily over time. One example of long-term investing is putting your money into an S&P 500 index fund, which includes the 500 biggest companies in the U.S. When you diversify, you’re spreading out your investments to reduce risk. Instead of betting everything on one stock, like Netflix, you’re putting a little money into many different companies, which helps protect you if one company doesn’t perform well.

But if your goal is to win your class stock market game and you’re willing to take some risks, Netflix might be the stock to watch. It’s got high volatility, which means its stock price can swing up or down quickly—a perfect target for a momentum trading strategy. Just remember, while a high-risk, high-reward approach can lead to quick gains in a competition, it’s not the best strategy for long-term financial security.