Opinions
Jim Cramer - Mad Money
Netflix Inc.
NFLX-Q
BUY
Mar 24, 2025
Stock price when the opinion was issued
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It recorded a great quarter last week and last January, but hasn't been immune from this ugly market. But it has made up its recent losses and it up 10.84% this year. They reported a solid revenue beat and monster earnings beat. Also, they didn't sound nervous about the future or the economy. but gave strong guidance for this quarter and reiterated their full-year.
Impressed by last week's quarterly results. Cracking down on password sharing is generating more revenue. Innovating by launching ad-supported versions. Geographic expansion. Aggressive investment in content. Has become a big free cashflow story.
Officially classified as a consumer discretionary stock, but he considers it more akin to a utility. A relatively inexpensive indulgence for the value it offers. Difficult macro headwinds would have minimal impact.
Meets a lot of his criteria but one -- it's not actually a capital-light business. Spends a lot on developing new content. A compounder. Well, and frugally, run. Investors would do well to read about the culture and the CEO. Dominates the space, market leader. Quite a bit of direct competition.
If you got in at favourable prices, stick with it. Strong company. One of the biggest mistakes investors make is that they "interrupt compounding unnecessarily" (paraphrased from Charlie Munger).
Is the leader in streaming. But you have to be a little wary of film accounting--you put the cash out front, but accountants will amortize that cost over time. So, earnings don't really reflect the true cash impact on an expanding portfolio of new releases. For a long time, NFLX was challenged on a cost basis, nor producing free cash. This is past and are now producing free cash.
He and Lang suggests consumer-oriented stocks with a subscription base that work even in a slowdown: Netflix, Roku and Spotify. Last January, NFLX reported a super quarter, then shares gapped up, but rolled over mid-February with the market. Lang says that was a reset. Shares have been rebounding ever since, now 9% this year. NFLX has resistance at $1,000, but if it breaks that, Lang thinks it can reach $1,250. A momentum indicator--MACD--recently made a bullish crossover. Meanwhile, the Chaikin Money Flow (CMF) is slightly bullish; big buyers are still buying. RSI is starting to bounce after hitting oversold earlier this month, now around 50, so there's a ways to go before being overbought.