Like him or not—Jim Cramer often gets you to stop and think, which is the method to his madness.
I’ve worked with him, worked for him and have been his friend and foe. (Currently friend.)
So when he started talking Netflix on CNBC todayI stopped to listen.
For a moment there, he had me: His point was that he believes Netflix , after this last quarter’s disappointing guidance, is a buy.
It was this reason that grabbed me: If Groupon’s IPO is valued at $25 billion, with a model that is advertising based, then surely subscription-based Netflix at its current value of around $12 billion, or half the price, is sharply undervalued.
To which I immediately thought: Makes sense (on the surface, at least), but … there’s nothing that says Groupon at twice the price of Netflix wouldn’t be grossly overvalued.
My take: I can’t tell you what’s going to happen to Netflix’s stock. If Groupon’s IPO is valued at $25 billion, Netflix could very well bounce higher. Or not. But if we’ve learned nothing else: Just because one stock is priced higher than another doesn’t mean the less expensive one is cheap.
Questions? Comments? Write to HerbOnTheStreet@cnbc.com
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