Financial Incentive Moment, Time to Own Netflix Stock.

    Financial Incentive Moment, Time to Own Netflix Stock. As consumer savings decline, it causes people to choose more affordable entertainment options. During the coronavirus pandemic, the federal government has launched several rounds of fiscal stimulus to support the US economy. These programs It included one-time checks of up to $1,200 per adult, increased unemployment benefits of $600 per week, and incentives such as suspending student loan payments and interest accumulation. Thanks to these, the economy also had a revival. As a result, many people have more money than usual and are allowed to spend more, resulting in increased consumption. As the pandemic slowed down, these incentives also decreased, and consumers' spending began to cut back to normal. That could be a good thing for Netflix NFLX (NASDAQ) $590,53 +1,98 (+%0,34) stock.

Reduced Financial İncentives

Millions of unemployed Americans initially received an extra $600 a week in addition to unemployment benefits. Shortly after that program ended, a new benefit program went into effect giving the unemployed an extra $300 a week. These grants will expire on September 6th. Thus, the expenditures of a large audience will be reduced. In addition, the Ministry of Education announced that students' frozen loans will expire in January. In this process, personal savings also decreased over time and the rate fell to 9,6% in July. Although, this is a number slightly higher than before the epidemic.

Financial Incentive Moment, Time to Own Netflix Stock.

What does this do for Netflix?

Prices for Netflix subscriptions range from $8.99 per month to $17.99 per month. This represents 30 days of fun for an entire family for less than $1 a day. However, from the help people get, they are likely to choose more expensive options, which may make them less likely to subscribe to Netflix or more likely to cancel their current subscription.

Investor takeaway

With many people having less disposable cash on hand, consumers can be expected to choose more affordable entertainment options like Netflix. This trend, and the fact that Netflix is ​​trading at a price/earnings ratio of 61, the lowest valuation on this metric since 2015, suggests that it's a good time to consider adding this stock to the portfolio.  

Source: The Motley Fool

 

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