Netflix Stock: A Hedge Against The Delta Variant

Unfortunately, the pandemic has lingered through 2021 as new cases are on the rise. Netflix stock could be one hedge against a worsening COVID-19 scenario.
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Since July, cases of COVID-19 have been on the rise in the US, and concerns over a return to social isolation has been growing. In the last month, the 7-day moving average in new cases reached more than 150,000 and continues to climb.

However, despite the lingering pandemic, shares of certain companies could still benefit from this bearish scenario. Netflix stock  (NFLX) - Get Netflix, Inc. (NFLX) Report is one of them.

Figure 1: Netflix logo.

Figure 1: Netflix logo.

(Read more from MavenFlix: Netflix Stock: Should You Buy It In September?)

Where we stand on the pandemic

The US was one of the first countries to get its vaccination campaign rolling. Currently, about 60% of the entire population has already received at least the first dose, while 50% have been fully immunized.

However, the country is now threatened by a third wave of COVID-19 cases. The main reason for the worsening of the pandemic is a more contagious delta variant that seems to be more resistant to the vaccines.

Figure 2: US COVID-19 cases.

Figure 2: US COVID-19 cases.

How Netflix benefits

During the pandemic, streaming services were positively impacted as the population remained stuck at home. Work and entertainment started to merge and share the same physical space, while people engaged in activities that did not depend on social proximity.

As a result, Netflix has seen its subscriber count increase dramatically during this period. The company ended 2019 at around 167 million paying users, which already looked impressive. One year later, the company reached more than 200 million subscribers, nearly 20% increase.

Another surge in subs could happen again ahead and through the cold winter months, although maybe not to the same extent, if the COVID-19 situation gets much worse and daily life outside the home gets impacted again.

Figure 3: Netflix paying streaming subscribers.

Figure 3: Netflix paying streaming subscribers.

NFLX stock jumps

From the start of the pandemic to its peak in early 2021, Netflix stock appreciated by nearly 50%. The jump from $381 to $532 occurred mostly in the first half of 2020.

Figure 4: NFLX stock chart.

Figure 4: NFLX stock chart.

Should some level of social isolation happen again, it would not be a surprise to see another leg up in NFLX share price. Therefore, investors who want protection from a future worsening of the pandemic might want to think about the leader in the video streaming space.

Regardless, even if rising COVID-19 cases do not become a major factor, we think that Netflix is ​​still a good company with solid growth prospects ahead.

(Read more from MavenFlix: Netflix in Gaming: 3 Reasons To Buy The Stock Now)

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Which types of stocks would you consider owning to protect your portfolio against the lingering pandemic headwinds?

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting MavenFlix)