CN Crim’s Jim Cramer came to Netflix’s defense on Wednesday after shares of the streaming giant were sold on its first quarterly report.
The stock has fallen more than 7% since the report came out after Tuesday’s close, despite the company beating the estimates on the top and bottom line. Investors were disappointed by the softer-than-expected growth of subscribers and an uncertain short-term future, Cramer noted.
“After the incredible performance this company has given us over the years, remember that doubt about Netflix was a mistake,” Cramer says on ‘Mad Money’.
Netflix had 208 million paid subscribers at the end of March, an increase of 14% over a year ago, but less than the 210 million the company expected.
Despite the decline in subscriber growth, CFO Spencer Neumann told the conference that ‘business stays healthy’, engagement is increasing and customer turnover is declining.
“To me, it says’ please, do not panic ‘… I think they will find a way to start new sign-ups with must-see content, whether they make it themselves or license it from someone else,’ Cramer said: “In other words, I’m giving Netflix credit for something that doesn’t exist yet, something that will make us feel compelled to subscribe despite all the competition.”
Earlier on Wednesday, Cramer said Netflix’s share could drop to $ 490 a share, although it remains strong in the long run. Netflix shares ended Wednesday at $ 508.90, down 14% from their January trading.