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Jim Cramer has hereby announced that Aug. 4, will live in infamy. When it comes to stock market battles, the day that Disney reported was a battle on Wall Street, and investors have been paying the price ever since.
Prior to that date, Disney's stock had become the must-own growth stock of 2015. And going into that fateful day when it reported, it was the best performing stock of the Dow Jones industrial average. In fact, it was too hot.
It was also on the day Disney reported its earnings that Cramer found the company's conference call to sound triumphant as it laid out a roadmap for ESPN, "Star Wars" and Shanghai Disney.
Instead, it turned out to be an epic ambush for the bulls as the stock dropped 14 points in two days, with a small, brief dead-mouse-bounce rally shortly afterward. The culprit? A few tiny words from management about expecting domestic cable affiliate revenue to fall a bit short of expectations and ESPN experiencing modest sub-losses.
"Ever since that conference call, the only cartoon character I can think about when Disney pops into my mind is Humpty Dumpty, because it seems that all the Street's horses and all the Street's men can't put Humpty Dumpty back together again," Cramer said.
What is strange to Cramer about Disney's decline is that there have been no number cuts. There were no reductions in what Wall Street thinks Disney can earn this year. If anything, Disney is probably buying back stock hand over fist and the earnings per share estimates are probably too low. Cramer thinks the company still has a lot going for it.
What disturbed Cramer the most is that when he looked back at Disney, it was priced to perfection and isn't anymore. And if Disney isn't perfect anymore, then maybe there isn't much else out there that is perfect.
That is why Disney's fall is so important.
If a company can fall from $122 to $100 in just a couple of weeks on no number cuts, then just imagine what could happen to any other stock that actually misses the numbers.
Suddenly, the media space, which has been one of the greatest safe havens out there, has become one of the most dangerous sectors.
"This market has gotten narrower and narrower by the day. Stocks have been under distribution for ages, meaning they have been sold relentlessly and not necessarily to good hands," Cramer said. (Tweet This)
Read more from Mad Money with Jim Cramer
Looking back on Disney's destruction, Cramer can see exactly what has happened. Investors have decided things are uncertain so they just won't pay as much for future earnings. This is evident as Disney didn't actually lower its earnings forecast.
In fact, the only stock that Cramer follows that seems to have survived the market blast is Hormel. Gold was also one of the only winners on Thursday. The good news is that a selloff like the one that occurred on Thursday brings stocks lower to the point where investors are willing to buy. So Cramer doesn't find that the market, or Disney, is dead.
But Cramer does want investors to accept that they were paying too much for Disney's earnings. The key is now to wait until they are paying too little for them. And judging by the action on Thursday, we haven't hit that point yet.