Jim Cramer’s advice on Netflix (NFLX) stock
Key Points
- CNBC’s Jim Cramer said Netflix’s sharp sell-off has made the stock more compelling, but investors shouldn’t rush in all at once.
- While slowing growth and tougher competition remain concerns, Cramer said Netflix’s valuation, record buybacks, and long-term growth opportunities still make the stock attractive.
CNBC’s Jim Cramer said Monday that Netflix’s steep sell-off has made the streaming giant worth another look. “It’s not often that you get one of the best companies on sale. That said, you can afford to take your time with this one,” the ” Mad Money ” host said. “If you’re still a believer in Netflix, I’d put on a small position here and then gradually add to it on weakness.” Netflix shares have tumbled roughly 44% over the past year, including another 10% drop after last week’s earnings report . While the company fell short of Wall Street’s expectations for second-quarter revenue, Cramer said the more troubling takeaway was management’s weaker-than-expected outlook and its increasingly difficult path to reaccelerating top-line growth. For the full year, Netflix expects to grow revenue between 13% and 14%, down from 16.5% growth in 2025. “I won’t pretend the quarter was great. It was a disappointment,” he said. “The content slate clearly isn’t as strong as usual.” Cramer said Netflix no longer enjoys the competitive advantages that once made it the undisputed leader in streaming. With consumers able to move easily between services, he said hit content has become increasingly important. That’s one reason he argued Netflix could have benefited from acquiring Warner Brothers , which would have added a deep library of intellectual property. Netflix walked away from the deal after WBD’s board deemed a revised bid by Paramount to be a superior offer. Wall Street was also unsettled by Netflix’s decision to further reduce its disclosures, Cramer said. Netflix said it will release its “What We Watched” engagement report annually instead of twice a year. That decision comes after the company last year stopped reporting quarterly membership numbers. Despite those concerns, Cramer said the stock has become much more attractive after its nearly yearlong retreat. At roughly 19 times this year’s earnings estimates, he noted Netflix is trading at its cheapest valuation since 2022. The company also repurchased $4.7 billion of stock during the second quarter, its most ever in a single quarter, and still has roughly $27 billion remaining under its buyback authorization. “I think there’s a reason why these guys are buying back stock at the fastest pace in history,” Cramer said. He added that Netflix remains one of the industry’s strongest businesses, with growth opportunities spanning advertising, live programming and gaming. Management expects advertising revenue to roughly double this year and estimates it has penetrated less than 45% of its addressable broadband households. “This isn’t a broken company,” Cramer said. “It’s one of the best companies around, with one of the best products.” Still, Cramer urged investors not to mistake a cheaper stock for an immediate payoff because he “wouldn’t be surprised if the weakness sticks with us for a while.” Sign up now for the CNBC Investing Club to follow Jim Cramer’s every move in the market. Disclaimer Questions for Cramer? Call Cramer: 1-800-743-CNBC Want to take a deep dive into Cramer’s world? Hit him up! Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram Questions, comments, suggestions for the “Mad Money” website? madcap@cnbc.com
