Jim Cramer on Netflix: “I Think This Sell-Off is an Overreaction”

Netflix, Inc. (NASDAQ:NFLX) is one of the stocks Jim Cramer put under the spotlight recently. Discussing the post-earnings sell-off in the stock, Cramer commented:

“I think this sell-off is an overreaction… However, I will say that it’s become harder to judge Netflix ever since the company stopped… the regular reporting of subscriber metrics and average revenue per user… Again, though, I think this often, Netflix is giving you a terrific buying opportunity because I’m not worried about their business at all. I trust management when they say the Brazilian tax issue won’t impact earnings going forward, and other than that tax charge, well, you know what? I saw a lot to like…

Now, apart from the numbers themselves, I think the whole Netflix narrative remains extremely compelling… Long story short, while Netflix certainly didn’t report a clean quarter, the biggest piece of hair on this thing was that major Brazilian tax charge, one-off. I think it’s crazy that the stock sold off 10% today, given that it was already down about a hundred bucks from its highs. Plus, after the sell-off, Netflix now trades at less than 35 times next year’s earnings estimates even though it’s expected to deliver 26% earnings growth. This thing could sell at 50 times earnings, it wouldn’t be all that expensive. I think it’s a fine price to pay.

Bottom line: As far as I’m concerned, Netflix has great revenue growth and aside from that Brazilian thing, its profitability keeps improving. They had a terrific content slate. Basically, nothing about this quarter makes me doubt the company. The only thing that’s changed is the stock’s gotten a heck of a lot cheaper, which is why I think this is an incredible buying opportunity.”

Netflix, Inc. (NASDAQ:NFLX) provides streaming entertainment, including TV series, films, documentaries, and games across multiple genres and languages.

While we acknowledge the risk and potential of NFLX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NFLX and that has 10,000% upside potential, check out our report about this cheapest AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.