Here's how Netflix nailed it

Did you miss the boat for the monster Netflix gains that hit the tape on Wednesday? Jim Cramer has been blindsided by bad calls on analysts before. What the heck happened with Sandisk and Tiffany?

Yes, they have made some bad calls in the past, but not this time. Two analysts nailed it perfectly, urging investors to buy ahead of the quarter.

"The work, done by John Blackledge at Cowen and Scott Devitt at Stifel, was exemplary and worth praising to the skies, because you had plenty of opportunity to act on their upgrades," said the "Mad Money" host.

So as an investor, what were the buy, buy, buy signs that flashed for Netflix?

Netflix
Jonathan Nackstrand | AFP | Getty Images

Cowen had some intense research based on a survey of 1,000 U.S. citizens, which indicated that the original content available on Netflix caused users to spend more time using it. Thus, they were willing to pay more for the membership.

It also indicated that users were doing more binge watching of Netflix programming, indicating that the acceptance of higher membership fees could lead to higher profits down the road.

Likewise, Stifel's analysis indicated that Netflix offered a "compelling risk reward ratio" in the $300s, because of its strong content cycle as well. In fact, his bullish target put Netflix at $450. Meanwhile, the stock closed at $409 with a 17 percent jump in price on Wednesday. It's certainly on its way up there.

Stifel's case was based on the fact that the huge increase in original programming would cause subscriptions to skyrocket. This is important, considering the fact that original programming costs so much less than purchased programming.

He even anticipated 100 million subscribers by 2018. A ridiculous number? Perhaps not anymore.

While Cramer thinks that 100 million might be a stretch, he does expect Netflix to generate some hefty earnings going forward based on the ability for the company to create original programming and attract subscribers at reasonable prices. This isn't any Amazon. These earnings will be real.

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"Frankly, I don't care how Cowen or Stifel got to why you should buy Netflix. The truth is that either report offered enough compelling evidence to make you want to pull the trigger and the forecasts were just right enough to do that," Cramer added.

Congratulations to those who bought the stock ahead of earnings, and Cramer hands tissues to those who shorted it. Well done, Netflix.

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