Jim Cramer on Netflix

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All quotes by Jim Cramer on Netflix

But this is what I mean about August. The fact is ... there's nothing really going on at Facebook, and nothing at Apple, Amazon, Netflix [or] Alphabet. They remain dominant in their industries, as dominant as they were when they reported their earnings.feedback

But the love for the product and the genius of the man behind it, [founder and CEO] Jeff Bezos, drove the stock to where it is today, one of the greatest runs of all time.feedback

But the second part? Whoa! It's almost impossible to tell how much money Tesla makes per car, if anything. Nor is it possible to define the future of the company. If everything goes right it could be the next Amazon, a tech company that sells cars, just as Amazon's a tech company that's in retail. If it doesn't, then the stock could flame out.feedback

I wish I had an answer for this conundrum. Maybe you just take some real 'Mad Money' and buy one of them: preferably Netflix or Amazon because they're far more proven than Tesla. No matter. The fact is that some stories flunk the near-term fundamentals even as they triumph over the long term. ... Two of these three have already done so. For all I can tell, the third will, too.feedback

Making things even more difficult, on the recent conference call, CEO Reed Hastings actually championed the notion that negative free cash flow, something I don't like, will be an indicator of enormous success. I just don't think that would pass the Lynch test.feedback

Given the 2017 numbers we should use, both the estimates and what's in the can, the stock's trading at 16 times earnings. That's before you back out the humongous cash hoard. It's dirt cheap, people.feedback

So, I decided to go back to see how FANG, my acronym for Facebook , Amazon , Netflix and Google, now Alphabet , was doing at that 15th anniversary when the piece was written, because I think it's an excellent illustration of why you shouldn't take these sirens of skepticism too seriously.feedback

What you need to know is that if you looked at the numbers alone two years ago, you would've missed that Amazon was developing this incredible cloud-based web services business. Hmm, what's 40 percent of Amazon worth right now? How about $395? That's right, the web services business alone is worth more than what the entire company was selling for a couple of years ago.feedback

I think those are low-ball numbers, too, but the point is that if you looked at the right metric two years ago, it would've been obvious that Facebook was much cheaper than it seemed. That's nothing like the Nasdaq peak in 2000.feedback

These are all new earnings per share boosters that give you more reason to buy the darned stock. Sears, its pathetic partner, doesn't have that much left, but it does have one of the best brand names in appliances. They haven't savaged that. Kenmore's still good. You put Kenmore together with Amazon, you throw in Alexa so you can scream at your washing machine all you want to turn on, and voila, you're off to the races.feedback

Now, I'm not saying these stocks can't go down – Alphabet and Netflix both declined [Thursday]. I'm saying that they just keep making news, generating actual events and products that are indeed additive to earnings. Raising-numbers FANG. As long as that continues to happen, these stocks can continue to go higher, and you shouldn't feel foolish for pulling the trigger because they seem to introduce needle movers every single day of the week.feedback

Okja was Netflix's final release of the second quarter and I think it's the film that put international sign-ups over the top of domestics. Right story, right publicity, fabulous knowledge of South Korean culture, all things that the conventional studios reject or just don't even know how to do.feedback

As Reed says, Negative free cash flow will be an indicator of enormous success. In other words, Netflix is an entertainment company but is being valued as a tech company, as money managers believe it's all well and good to lose money now if you're going to dominate later.feedback

It's the same model as Amazon. Money managers backed Amazon because they knew, at a certain point, if they wanted to, they could raise the price of Prime offerings to make more money. The more Netflix knows about what people love, what you love, the more it can scale that love into not profits – as so many thought were needed – but subscribers. And by that metric, do you know that the stock of Netflix remains undervalued? Which is why, even after this run, it is still not too late to buy Netflix.feedback

Facebook figured out you use the internet to be able to tell personal narratives. Amazon figured out you use the internet to sell merchandise. Google figured out the internet to be able to do YouTube short form. These guys figured out the internet by being able to produce content that is loved in Korea and loved in Brazil and loved in Europe.feedback

I come back after a hard day and just like it.feedback

You know you don't to get to be FANG for nothing.feedback

Given all the original content Netflix puts out, the failures are somewhat inevitable, and if anything, they'll have to increase. That's the law of large content. Still, the record is darned good, much better than everyone else, and that matters, especially when worldwide numbers are at stake and some content plays extraordinarily well overseas.feedback

We have consistently valued stocks under our coverage based upon the discounted present value of their future cash flows.' Goodie. That bit of ideology reminds me of that quote everybody attributes to Albert Einstein about the definition of insanity: doing the same thing over and over again expecting different results.feedback

Knowing the right metric has always been the key to picking good stocks. Wedbush has clearly picked the wrong metric. And sometimes, that's all that matters.feedback

You see, at a certain point, the prism you're using is just wrong, and you've got to to scramble. You have to adapt. You've got to find a new one. I don't mean to pick on Pachter, although I think 'Pick on Pachter' would be a great name for a sit-com, but periodically, there are stocks that defy the traditional metrics and you've just got to scrap those metrics if you want to understand the stock.feedback

In the last 24 hours, we heard that Facebook, letter F, is now going to charge for Messenger, one of its greatest yet-to-be-monetized assets. Letter A, Amazon? Prime Day exceeded all expectations, including the incredibly high ones that I set. N, Netflix, catching a lot of love just today from analysts who're seeing great international growth. And then ... Alphabet won a billion-dollar tax fight in Europe.feedback

Amazon and Netflix are much harder for me because they're so difficult to value. All I can say is there's nothing wrong with either of these companies, but the stocks do take breathers now and then, and when they do take them, well, they've been rewarding to buy. I don't know why this time would be any different.feedback

That's why we like the stocks of Apple, Amazon, Alphabet, Activision Blizzard, Constellation Brands, Domino's, Netflix and Nvidia so much. And you can substitute Electronic Arts and Take Two Interactive for Activision Blizzard, because all the video games are benefit from a similar trend. I know we've heard endlessly about the cord cutters because they don't want to spend money on that big cable bill. But this quarter is the shout out quarter to the cord-nevers, for example, we heard that on Walt Disney's conference call that it got people pretty worried.feedback

That is a giant admission that these chains aren't going to be able to get as many people in the seats anymore buying beer for too much money versus what you can buy it for at the supermarket. And yes, selling marked-up alcohol is the secret behind the success of so many dinner chain restaurants. Whether it's student debt or lower wages or a sense that you want to multi-task, check out Facebook, Snap or Twitter while watching the game or looking at Netflix, or maybe all of those, the simple fact is that the change is accelerating, not arresting itself.feedback

There's another aspect that has Netflix's stock ramping endlessly: takeover talk. Let's put it this way: Apple's had ample time to consider buying Netflix to augment its service revenue stream – the key to having investors pay up for an otherwise hardware business model that's always viewed skeptically. The scuttlebutt says that Disney's ready to spin off ESPN and take in Netflix with a simplified structure, less levered to cord cutting. Last week's noisy layoffs at ESPN solidified the chatter.feedback

Amazon reported a fabulous quarter where it felt like the company couldn't hide its amazing profitability even if it wanted to. It's a great sign about the profitability because Amazon's expanding like mad. On every conference call, there are these endless questions about competition and how Netflix could ultimately get slammed because of it.feedback

This is a company that may have the most powerful subscribers in the world with 150 million strong. Maybe we don't need to buy Netflix.feedback

That's lunacy. I am waiting for Netflix to get to 200 million viewers … If they can get to 200 million, then the stock is a bargain even up here at $138.feedback

Both Netflix and Tesla, like Amazon, require you to think outside the box of traditional fundamental analysis in order to accurately value their stocks.feedback

This was a joyous note to shareholders. And then a fabulous arc of an interview that he does with the Q&A. I urge anyone who owns Netflix and owns it because they think it's terrific read his note.feedback

I love the company, I love the stock, but at this point I think you have to say you missed it, simply because so many analysts have already pushed Netflix up. No, I don't think Apple will buy them.feedback

But I say if they weren't interested in Netflix at $25 billion, I can't imagine them wanting it at $70 billion.feedback

If you weren't dazed and confused, too, then you obviously weren't on the Netflix conference call.feedback

Perhaps you were listening to an old call, when the idea that someone wouldn't pay up for Netflix was inconceivable. Not anymore.feedback

Now, I am not so sure. You just shouldn't be getting this level of Netflix cutting. And the lack of domestic growth isn't being made up overseas, like it used to be.feedback

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Quotes by Jim Cramer on Netflix

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