After one siding with the bulls in the near future NetflixCNBC’s latest earnings report, Jim Cramer explained why this quarter made him more optimistic about the company’s future, and said he was impressed by management’s perspective and commentary on content.
“If you’re worried about Netflix not having enough leverage to generate future growth, or at least enough growth to justify the stock’s price-to-earnings multiple, then I think those concerns have been Resolved thanks to last night’s earnings. report,” he said. “In the short term, the Netflix bears will hibernate, but remember all these positives when they inevitably come out of their dens and try to take on the company This best equals a stock that I think can go higher over the long term.”
Netflix beat Wall Street expectations for earnings, revenue and paid membership growth as it posted its report on Thursday night. Shares of the streaming giant pop up 11% on Friday morning and maintained that increase until the close.
Cramer is encouraged by management’s guidance for the current quarter and 2025, as the company is expected to maintain double-digit revenue growth that some investors fear will be difficult to sustain. maintain. He also appreciated co-CEO Ted Sarandos’ explanation of Netflix’s vast library and engagement, including his assertion that the average member watches two hours of content per day. Cramer pointed out that Sarandos also said that the streamer is focusing on adding “value to the package” rather than bundling content with other streaming services as some competitors are doing .
This breadth of content makes Cramer optimistic about Netflix’s ability to scale its advertising levels, pointing to popular offerings like “Emily in Paris,” “Selling Sunset” and “The Ink Game,” as well as two National Football League games are streamed on Christmas. He also liked Sarandos’ positive article on how AI will impact business.
“I’m not saying Netflix has become an AI game, not at all. I’m just saying that between the expanding library, the clear customer interest in the ad tier model, and the ability to harness the power of artificial intelligence, we have a lot of upside here and it will bring in a lot of money,” Cramer said.
