Jim Cramer Tells Mad Money Caller Why Netflix (NFLX) Is Worth a Moderate Buy
You've owned a stock for years. You believed in the company, trusted the leadership, and watched your investment grow. Then suddenly, everything changes. The CEO steps down. A major deal falls apart. And your stock drops 35% in a year.
That's exactly where one longtime Netflix shareholder found himself when he called into CNBC's Mad Money on August 27, 2026. His question to Jim Cramer was simple but loaded with anxiety: Is it time to hold, add, or sell Netflix?
Cramer's answer? "I think that Netflix is a buy, not a huge buy."
Let's break down exactly what that means, why he said it, and what it could mean for your portfolio.
What Jim Cramer Actually Said About Netflix
The Caller's Question That Started It All
The caller didn't mince words. He told Cramer he'd been "a believer in the importance of corporate leadership" and had been "very patient". But his patience was wearing thin.
His concerns? Two big ones. First, what he called a "very poorly managed Paramount offer" back in February. Second, the reality that Reed Hastings is no longer at the helm.
The caller's frustration was palpable: "I'm starting to wonder if this is really the same company I invested in."
It's a fair question. When the founder leaves and the company makes a big, failed play for another media giant, you have to wonder if the magic is still there.
Cramer's Exact Words: "A Buy, Not a Huge Buy"
Cramer didn't sugarcoat his response. He validated the caller's discomfort right away: "In the time, the whole Warner Bros. Discovery delivery, it left me cold, too."
But then came the key line: "I think that Netflix is a buy, not a huge buy. I mean, I wouldn't put a lot of money, but I think it can bounce here."
He followed up with something important: "I do think these are still the great guys that have built a terrific company."
That's the crux of it. Cramer still believes in the management team and the business. He just doesn't think you should bet the farm on a quick recovery.
💡 Key takeaway: Cramer's call isn't a full-throated endorsement. It's a cautious, measured vote of confidence in a company he believes still has strong fundamentals.
Why Netflix Stock Has Taken a Beating
To understand Cramer's "moderate buy" call, you need to understand why Netflix shares have been crushed.
The 35% Drop in Context
Netflix shares have fallen roughly 35% over the past year. At one point, the drop was even steeper, touching 44% from its highs. The stock closed at around $68.67 in late July after its Q2 earnings report, though it has since rebounded modestly.
For a company that was once the darling of Wall Street, that's a gut punch.
The Warner Bros. Discovery Deal That Fell Apart
One of the biggest catalysts for the sell-off was Netflix's failed attempt to acquire Warner Bros. Discovery. The company reportedly bid around $83 billion before walking away.
The deal talks left investors cold, and Cramer admitted they left him cold too. When a company makes a big, public play for another business and then walks away empty-handed, it raises questions about strategy and execution.
Leadership Questions After Reed Hastings
Netflix co-founder Reed Hastings stepping down from his role has created an overhang of uncertainty. The caller captured this anxiety perfectly: without Hastings, is it really the same company?
It's the classic "founder departure" question that every great company eventually faces. Sometimes it works out (Apple after Steve Jobs? Eventually, yes). Sometimes it doesn't.
The Numbers That Still Make Netflix Attractive
Despite all the drama, the business itself is still performing.
Q2 2026 Earnings Breakdown
Netflix's Q2 2026 results were actually solid:
Yes, revenue slightly missed Wall Street's $12.58 billion estimate. But the company still posted record quarterly revenue. Every region delivered double-digit growth, Latin America up 21%, Asia Pacific up 16%, EMEA up 14%, and North America up 10%.
That's not a broken company. That's a company that's still growing, just a bit slower than investors hoped.
Valuation at 19x Forward Earnings
Here's where things get interesting. Netflix now trades at roughly 19 times forward earnings estimates.
To put that in perspective, the stock's five-year average forward P/E is around 31. So Netflix is trading at a significant discount to its own historical valuation.
Cramer put it bluntly: "This is not a broken company. It's one of the best companies around with one of the best products, and the numbers are still better than most."
📊 The valuation argument: When a great company trades at a discount to its historical average, patient investors take notice.
The $4.7 Billion Buyback Signal
Netflix completed a record $4.7 billion share buyback in Q2, with another $27 billion remaining in authorization.
When a company buys back its own stock aggressively, it signals one thing: management believes the shares are undervalued.
It's the corporate equivalent of saying, "We think our stock is cheap, and we're putting our money where our mouth is."
What "Moderate Buy" Actually Means for Your Portfolio
Cramer's Strategy: Start Small, Scale In
Cramer's "moderate buy" recommendation isn't just a rating, it's a strategy.
He's essentially saying: Start with a small position. See how things develop. If the stock continues to fall, buy more gradually.
This is what professional investors call "scaling in." Instead of going all-in at one price, you buy in increments. It reduces your risk and gives you flexibility if the stock moves against you.
Earlier this year, Cramer described a similar approach: start with a small position and gradually buy more if shares continue to fall.
It's not sexy. It's not exciting. But it's smart.
How This Aligns with Wall Street's Consensus
Here's something interesting: Cramer's "moderate buy" call aligns almost perfectly with the broader analyst consensus.
According to data from MarketBeat, Netflix has a consensus rating of "Moderate Buy" from the 55 brokerages covering the stock. The breakdown:
The average 12-month price target is around $96.65, implying significant upside from current levels.
So Cramer isn't going out on a limb here. He's aligned with the broader Wall Street view, but he's also injecting a healthy dose of caution.
The Bull Case vs. The Bear Case
Let's be honest about both sides of this trade.
Why the Bulls Are Still Optimistic
- Valuation is cheap - 19x forward earnings vs. a 31x five-year average
- Advertising revenue is accelerating - management is targeting $3 billion in ad revenue for 2026
- Massive buyback program - $27 billion still remaining
- Global subscriber base of 325+ million - still the undisputed leader
- Double-digit revenue growth across all regions
What Could Go Wrong
- Slowing revenue growth - guidance points to just 11.7% in Q3 vs. 17.6% in Q4 2025
- Reduced transparency - Netflix no longer reports quarterly subscriber numbers
- Content pipeline concerns - the recent slate hasn't been strong enough
- Failed Warner Bros. deal - raises questions about capital allocation
- Leadership transition risk - life after Reed Hastings is still uncertain
⚠️ Reality check: Cramer isn't ignoring these risks. He's acknowledging them and still saying the stock is worth buying, just not in huge size.
How to Approach Netflix Stock Right Now
So what should you actually do?
If you don't own Netflix: Consider starting a small position. Cramer's "moderate buy" call suggests the risk-reward is favorable at these levels, but you shouldn't go all-in.
If you already own Netflix: This is probably not the time to panic sell. Cramer validated the caller's concerns but still recommended holding, and even adding, to the position.
The "moderate" approach: Think of it like this, if you normally invest $10,000 in a stock you really like, maybe put $2,000-$3,000 into Netflix right now. If it drops another 10-15%, add more. If it bounces, you're already in.
Cramer's framework is about patience and discipline, not FOMO or fear.
Final Takeaway
Jim Cramer's "moderate buy" call on Netflix captures something important about investing in volatile times: you don't have to be all-in or all-out.
The streaming giant has real problems, leadership transition, slower growth, and a failed deal that left a bad taste. But it also has real strengths, a dominant global position, a massive buyback program, and a valuation that's historically cheap.
Cramer's message to that worried caller, and to all of us, is simple: Believe in the company. But don't bet the house.
The bottom line: Netflix is worth a moderate buy. Start small. Scale in. And keep your eyes on the fundamentals, not the noise.