Opinions Jim Cramer - Mad Money
Netflix Inc.NFLXPARTIAL BUYJul 20, 2026
Jim Cramer - Mad MoneyStock price when the opinion was issued
As of Nov 11, 2026. Market Open.
You might be interested:
Streaming industry has become much more competitive. Difficulty maintaining a consistent, ongoing subscriber base (rather than intermittent), which also affects advertiser interest. Wait to see action on this issue before committing more $$.
Disclaimer: Not owned in segregated client accounts. However, her colleague John O'Connell owns it in the equity fund that he manages.
It's had a rough year, following the failed Warners bid. He still likes it, because the business is performing quite well. They have more subscribers and revenues outside the U.S. where they have little competition and are growing rapidly. Also, they replaced the head of content, and are looking to ad sports. Lots of ways to improve growth ahead.
(Analysts’ price target is $86.35)
The fundamentals are as good or better as people have hoped. But there are worries that people are watching YouTube and no longer Netflix, but this is not in the numbers. These things reverse very quickly. Look at Google's stock. He thinks Netflix will grow at double digits for many years.
Barry Schwartz
;fill-opacity:1;'/%3e%3cpath%20d='M31%2018.6001V30H8V18.6001L14.1334%2022.4334L19.4999%2014L24.8669%2022.4334L31%2018.6001Z'%20fill='%23EE5432'%20style='fill:%23EE5432;fill:color(display-p3%200.9340%200.3310%200.1956);fill-opacity:1;'/%3e%3c/svg%3e){kind=small}
Premium contentNetflix plans to accelerate growth in live entertainment. It currently spends 5% of its annual $20 billion content budget on it, though attracts 1% of viewership. Overall content spending is up from $24 billion in 2025 to $25.1 billion in the first half of this year alone. The spending will squeeze cash flow, but new content will attract viewers in an ever-competitive industry. As for the share price, it's been brutal, plunging from its spring highs around $108 to a current bottom of $67 to match level from late July. Yes, Netflix faces challenges, but it has too many good numbers to dismiss. Time to bottom-feed.
There are two big streaming companies, Netflix and YouTube. Netflix should be able to increase its subscriber growth by diversifying its business into sports, etc. There is an uptick on their paids. It does a lot of its own content and buys content very easily. You can buy at these levels.
It's too cheap to ignore. Is down 44% in the past year, including -9% since reporting last Thursday. It's gone from market darling to pariah. Last week, sales missed expectations slightly and EPS came in-line. Worse, free cash flow was much lower than expected due to higher tax payments and termination fees when Warners walked away from the merger. Guidance for Q3 was lowered as was the full-year forecast. But it's on pace for 13-14% revenue growth this year with a 31.5% operating margin and $12.5 billion free cash flow Companies kill for these numbers. In Q2 2025, growth was 16%, and growth is now slowing down. Also, they stopped providing quarterly subscriber numbers in Q1 2025, which the market didn't like. They lack a show like Squid Games to drive subs growth. Subscribers have jump from streamer to streamer. Warners paid Netflix a $2.88 billion termination fee, but the street now sees that Netflix needed Warners more than vice versa. Overall, the stock has nearly been cut in half, so he's interested in it. Netflix bought back $4.7 billion in shares during Q2, the biggest ever, with $27 billion remaining to buy. JP Morgan projects NFLX's compound annual growth rate to be 24% EPS, and 22% in free cash flow. NFLX trades at a discount to the S&P, though Nvidia does too as do others. If engagement keeps slower and revenue falls below 10%, shares will keep declining. However, this is not a broken company, but one of the best anywhere and its numbers are still better than most. Ad revenue this year should double to $3 billion. The gap between the economics between the ad and ad-free plans are narrowing. At 19x PE, you get a well-run company on sale. Part a tranche now and add more on more weakness.