Buy Netflix after streaming giant’s post-benefit slide

CNBC’s Jim Cramer on Wednesday advised investors to buy shares of Netflix, arguing that the stock’s post-earnings decline creates an attractive buy point.

“When you see Netflix pulling back after a very solid set of numbers and many price target increases, where management has come up with a compelling long-term strategy, you have to take it as a giveaway … to buy, not to sell,” the host of “Mad Money” said, after the streaming giant closed Wednesday’s session down 2.17% to $ 625.14 per share.

As Netflix beat Wall Street estimates on earnings per share and subscriber additions, Cramer admitted third quarter results were “not perfect.” He pointed to Netflix’s cautious directions for the current period and the fact that subscriber additions in the United States and Canada were essentially flat compared to the quarter last year.

“I don’t like that the business seems to be peaking in North America, but I prefer to take a half-full approach because Netflix is ​​absolutely killing it overseas,” Cramer said, describing Tuesday night’s report. company as “a wake-up call for everyone who slept on Netflix’s international affairs.”

Investors have focused on subscriber growth as a key metric to rate Netflix for more than a decade, Cramer said. However, Cramer said he believes monetization will become increasingly important, noting management’s plan to increase margins in the years to come.

Netflix is ​​also moving into video games, which if successful would provide the company with a much larger total addressable market, Cramer said. Additionally, the host of “Mad Money” said that Netflix’s merchandising efforts related to its most popular content, like the current hit “Squid Game”, might be worth it even if it goes about it differently. .

During Tuesday’s earnings call, co-CEO Reed Hastings “reflected on how, in three years, when the next sensation like” Squid Game “comes out, the wish to have related game options as well. than consumer products that they could sell right out of the door, ”Cramer said, comparing the strategy to that of Disney.“ I like it, but I’d rather they allowed it, ”a- he declared.

Disclosure: Cramer’s Charitable Trust owns shares of Disney.


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