When Jim Cramer saw the volatile action of Disney's stock on Wednesday, he knew that in order to determine what happened, he had to be clinical and unemotional. After all, he doesn't consider this just any ordinary stock. It's the one that he has always told investors to buy for their kids and then put away.

"You have to ask yourself, has that much changed with one quarterly report? To figure that out, you have to analyze not just Disney's fundamentals, but the stock itself," the "Mad Money" host said.

When he looked at the stock, Cramer found that it all came down to just three words used by Disney's CEO Bob Iger.

Disney has been the best performer of the Dow this year. Its historic run began in February 2014, at about $71 a share. It closed at $121 Tuesday night.

Cramer argued that Disney's stock was priced for perfection coming into the quarter, trading at 25 times earnings. When a stock is that expensive, the company cannot afford to miss estimates, and Disney did.

"So, I'm not dismissing this decline, but most stocks do get cheaper when they go lower, and that certainly goes for Disney's," Cramer said. (Tweet This)

One thing that Cramer can confirm from looking at Disney's fundamentals is that there were many line items, ranging from broadcast and cable to theme parks, that were actually better than the expected numbers.

But it was the disappointing cable numbers that were the cause of Wednesday's decline. Iger used three words on the company's earnings conference call that Cramer thinks wrecked the stock: he said Disney experienced "some subscriber loss."

When Cramer hears the word subscriber, he thinks of bundle. Meaning, the cable bundles that include all of those ESPN stations that are lucrative for Disney. And when Cramer hears the word loss, he concludes that either customers are not buying the product like they used to, or they are cutting the cord.

This is bad news for Disney, and all of cable, which is why almost every entertainment stock was down on Wednesday.

Considering that cable makes up 46 percent of Disney's operating income, subscriber losses do matter. Additionally, Disney had forecast cable operating income and revenue growth to be in the mid- to high-single digits. On Tuesday night, it revised that forecast down.

Ultimately. Cramer thinks Disney paid too much for very good sports programming, and now it isn't getting the subscribers it needs to pay for all of that programming because people aren't taking the bundle like they used to. That is exactly why the stock was hammered.

Analysts also suspected that there was a slowing in profit growth for the company, as ESPN also recently cut personnel costs when it blessed the high-profile departures of Keith Olberman, Colin Cowherd and Bill Simmons from the network.

"Given the run in the stock and the high-profile departures, investors presumed the worst, and they are betting that subscriber losses are happening, and the change isn't glacial anymore—it is rapid," Cramer explained.

Clearly, Disney is not perfect. But was all of the selling warranted?

Cramer thinks that the selling made sense at $122, but not down at $111. Those three damning words from Iger do not merit selling Disney at the levels it hit on Wednesday.

"Yes, there are chinks in Disney's armor. But not enough to dissuade me from my view that, over the long term, this stock remains a terrific buy for posterity, and it will stay that way as long as Bob Iger's at the helm," Cramer said.

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