NFLX Stock Has Fallen 44% Over The Past Year — Why Jim Cramer Says It's Time To Take Another Look

• Jim Cramer said Netflix's weaker outlook, softer content slate and reduced disclosures have weighed on investor sentiment following its latest earnings report.
• Despite the challenges, Cramer said Netflix remains one of the industry's strongest companies, supported by advertising, live programming, gaming and aggressive share buybacks.
• Cramer noted Netflix is trading at its cheapest valuation since 2022 but cautioned that the stock could remain under pressure in the near term.

Shares of Netflix Inc. (NFLX) ended Monday's regular session down nearly 2% and extended losses in after-hours trading, edging another 0.13% lower at the time of writing. Despite the recent sell-off, CNBC’s Jim Cramer said the stock’s pullback has created a more attractive opportunity for long-term investors.

Cramer Sees A Buying Opportunity

Cramer said Netflix’s around 44% decline over the past 12 months has made the streaming giant worth another look. “It’s not often that you get one of the best companies on sale. That said, you can afford to take your time with this one,” Cramer said, according to a CNBC report. He added, “If you're still a believer in Netflix, I'd put on a small position here and then gradually add to it on weakness.”

While Cramer acknowledged that Netflix missed Wall Street's second-quarter revenue expectations, he said the bigger concern was management’s weaker-than-expected outlook and the increasingly difficult path to reaccelerating revenue growth.

He also said Netflix no longer enjoys the competitive advantages it once had as the undisputed leader in streaming, adding that hit content has become increasingly important as consumers move more easily between streaming services. Cramer stated that Netflix could have benefited from acquiring Warner Bros., which would have added a deeper library of intellectual property, before the company walked away after Warner Bros.' board deemed Paramount's revised bid to be the better offer.

Cramer also pointed to Wall Street’s concerns over Netflix’s decision to reduce disclosures. The company said it will release its “What We Watched” engagement report annually instead of twice a year, following last year's decision to stop reporting quarterly subscriber numbers.

Why Cramer Still Likes NFLX

Despite those concerns, Cramer said Netflix has become much more attractive after its nearly yearlong retreat. He said the stock is trading at roughly 19 times this year's earnings estimates, its cheapest valuation since 2022. Netflix also repurchased $4.7 billion of stock during the second quarter, its largest quarterly buyback ever, and still has roughly $27 billion remaining under its buyback authorization.

“I think there's a reason why these guys are buying back stock at the fastest pace in history,” Cramer said.

He added that Netflix remains one of the industry's strongest businesses, with growth opportunities in advertising, live programming and gaming.

“This isn't a broken company,” Cramer said, adding, “It’s one of the best companies around, with one of the best products.”

Still, Cramer cautioned investors not to expect an immediate rebound, saying he “wouldn't be surprised if the weakness sticks with us for a while.”

Phillip Securities Also Turns Bullish

Separately, Phillip Securities also upgraded Netflix to 'Buy' from 'Accumulate,’ saying the recent share-price weakness has created a more attractive entry point. The brokerage maintained its $110 price target, implying nearly 60% upside from the stock’s Monday’s closing price. The firm cited subscriber momentum, pricing strength, advertising growth and long-term earnings prospects as key drivers of future upside.

NFLX Stock: What Stocktwits Retail Sentiment Says

On Stocktwits, retail sentiment for NFLX was ‘extremely bullish,’ while message volume was ‘extremely high’ at the time of writing.

NFLX shares have lost 28% year-to-date.

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