After running into bulls in the run-up to NetflixIn a recent earnings report, CNBC’s Jim Cramer explained why the quarter made him more optimistic about the company’s future, saying he was impressed by management’s outlook and content commentary.
“If you were worried that Netflix doesn’t have enough leverage to drive growth going forward, or at least enough growth to justify a stock price increase, I think that concern was put to rest by last night’s earnings report,” he said. “Soon, the Netflix bears will be put to sleep.” , but remember all this good when he inevitably comes out of his hole and tries to hurt this highly integrated company with a stock that I think can go up for a long time. .”
Netflix beat Wall Street’s expectations for profit, revenue and paid membership growth when it posted its report Thursday evening. The giant’s shares rose 11% on Friday morning and maintained those gains until the end.
Cramer was encouraged by management’s guidance for the current quarter and 2025, as the company expects to continue double-digit revenue growth that some investors fear will be difficult to sustain. He also praised CEO Ted Sarandos’ explanation of Netflix’s massive library and engagement, including his assertion that members on average watch two hours of content a day. Cramer pointed out that Sarandos also said the broadcaster is focused on adding “more value to the package,” rather than bundling content with other streaming services, as some competitors do.
This breadth of content makes Cramer optimistic about Netflix’s ability to scale its ad-tier, pointing to popular offerings like “Emily in Paris,” “Selling Sunset” and “Squid Game,” as well as two National Football League games that will air on Christmas. He also liked Sarandos’ excellent reading of how AI will affect business.
“I’m not saying that Netflix has become an AI play, by no means. I’m saying that between the growing library, the clear interest of customers in the ad-class model, and their ability to use the power of artificial intelligence, there’s a lot of good here, and it’s going to translate into a lot of money,” Cramer said.
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