After aligning with the positive perspective on Netflix before its latest earnings report, CNBC’s Jim Cramer elaborated on why he felt more optimistic about the company’s future. Cramer expressed his approval of Netflix’s management outlook and their commentary on content. He indicated that concerns regarding Netflix’s ability to sustain growth and justify its stock’s price-to-earnings multiple were alleviated by the recent earnings report. He noted that, while Netflix’s skeptics may temporarily retreat, it is important to remember the positives when they inevitably resurface.
Netflix exceeded Wall Street’s expectations in terms of earnings, revenue, and paid membership growth. Following the release of the report on Thursday evening, the streaming giant’s shares surged 11% Friday morning and retained those gains through the market close.
Cramer was pleased with the management’s guidance for the current quarter and into 2025, as the company plans to continue its double-digit revenue growth, contrary to some investors’ concerns. He also lauded co-CEO Ted Sarandos’ insights into Netflix’s extensive content library and user engagement, noting that members, on average, watch two hours of content daily. Cramer highlighted Sarandos’ emphasis on adding value to Netflix’s offerings, as opposed to bundling content with other streaming services, as some competitors are doing.
Cramer remains optimistic about Netflix’s potential to expand its ad-tier, supported by popular shows such as “Emily in Paris,” “Selling Sunset,” and “Squid Game,” along with two NFL games scheduled to stream on Christmas. He also appreciated Sarandos’ positive outlook on the impact of artificial intelligence on the business.
Cramer clarified that while Netflix is not solely an AI company, the combination of its expanding content library, clear consumer interest in the ad-tier model, and the ability to leverage artificial intelligence presents numerous advantages that could translate into significant revenue.
