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Cramer Remix: The big problem that triggered Netflix’s decline

  • "Mad Money" host Jim Cramer tackles the pullback in Netflix to determine if weakness is really just a buying opportunity.
  • Cramer also wonders if the market should have a "fun index" based on some executives' lively conference calls.
  • In the lightning round, Cramer expresses some doubt about the stock of Kinder Morgan.

Frankly, CNBC's Jim Cramer was nervous before Netflix reported its quarterly earnings after the bell on Monday because he knew expectations were very high.

That's why the "Mad Money" host was not all that surprised when the stock closed down over $1 on Tuesday, falling to $199.48 from its post-earnings high of $207.

"Here's the issue in a nutshell: when everyone expects the numbers to be phenomenal, it's very difficult to blow people away, no matter how excellent the quarter really is," Cramer said. "And make no mistake, this was an absolutely fabulous quarter. Not perfect, but really, really great with even better guidance."

And Wall Street seems to agree despite the stock's tepid reaction to Netflix's estimate-trumping quarter, in which the streaming giant added 5.3 million net subscribers.

"Netflix's stock may have sold off a bit today, but don't take that as an indictment of the quarter," Cramer advised. "Remember, these declines tend not to last very long in this market if the companies behind them are growing like weeds, as this one is, and the analysts who recommended it before will reiterate their buys with raised price targets — in fact, that process has already started. In a few days, buyers will swarm back to the stock, which I believe is worth a lot more than its current market cap because of the vision, the artificial intelligence — they know what you want — and the fact that Netflix is one of the great bargains of our era."

Peak Earnings Phooey

Listerine mouthwash bottles move through the production line at the J&J consumer healthcare products plant in Lititz, Pennsylvania.
Andrew Harrer | Bloomberg | Getty Images
Listerine mouthwash bottles move through the production line at the J&J consumer healthcare products plant in Lititz, Pennsylvania.

With the Dow Jones industrial average surging through the 23,000 level for the first time ever, Cramer offered investors a piece of contrarian food for thought.

"Here's something you never hear from anyone: Maybe stocks are cheaper than we think," Cramer said. "When we see gigantic Dow Jones components jumping like small capitalization stocks, which helped the venerable index trade through 23,000 at one point today ... we do know that something real is afoot."

Cramer started with the "household names." Johnson & Johnson issued a strong earnings report before the opening bell on Tuesday, with pharmaceutical sales up 15 percent.

"That's some amazing, turbo-charged growth," Cramer said. "Yet when you look at Johnson & Johnson's price-to-earnings multiple, which is how we compare companies on an apples-to-apples basis ... this stock sells for just 18 times next year's earnings estimates."

All in all, Cramer is tired of hearing how expensive stocks are. Thirty years ago this week, in 1987, the market crashed; back then, stocks traded at 29 times earnings. But now, any pullback could be a gift for eager buyers, Cramer said.

"I hear people say, 'But Jim, this is peak earnings.' I say, 'Sure, I'm worried about the pricing of some [sectors]: DRAMs, semis, disk drives, flash memory. But I don't think we're seeing peak numbers from a JNJ,'" the "Mad Money" host said.

Off the Charts: Consumer Staples Struggles

Kraft and Heinz products
Scott Olson | Getty Images
Kraft and Heinz products

With the indexes breaking records, including the Dow Jones industrial average's all-time high on Tuesday, Cramer wanted to pause and investigate what's not working in this market.

"Even if the greatest bull run in ages is going on, there are losers and there are laggards, and they help define the action as much as the winners do," the "Mad Money" host said. "That's why we need to address the left-behind sector that is the consumer staples cohort, an important group that really hasn't participated in the last leg of this rally."

So Cramer called in technician Ed Posni, managing director of Barchetta Capital Management and Cramer's colleague at RealMoney.com, to help him unpack the charts for a better view of the consumer goods group.

ThoughtSpot CEO Talks Big Data Problems

Ajeet Singh, CEO, ThoughtSpot
Scott Mlyn | CNBC
Ajeet Singh, CEO, ThoughtSpot

It's no secret that big data is becoming central to almost every industry, but Ajeet Singh, the founder and CEO of private business-intelligence player ThoughtSpot, still sees some obstacles.

"We believe that the future belongs to ease of access of data, and we look at big data not as a visualization problem, but really, as a human scale problem," Singh told CNBC in a Tuesday interview with Cramer.

It's easy to use comprehensive tools like Tableau Software's offerings to bring data to the average worker, Singh said, but most companies still require professional help to make sense of the information.

"You still need an expert analyst to build a nice dashboard, and it takes about a week to do that. You need, really, fundamentally built technology that can be used by an average business user, and that is what ThoughtSpot provides," Singh, also a co-founder of cloud play Nutanix, told Cramer.

Time for a Fundex?

Finally, after listening to some joyful conference calls like the one led by Netflix CEO Reed Hastings, Cramer pitched a fun-loving idea.

"Maybe we should have a fun index, an index made up of companies where the executives seem to be enjoying themselves, happy to tell their story on a conference call after earnings," the "Mad Money" host said.

From the outspoken, competitor-bashing John Legere to the ugly-sweater-wearing Hastings, CEOs who have fun during their conference calls can have a bigger impact than just inciting some laughter from analysts and listeners, Cramer argued.

"I'm not asking for there to be a suspension of rigor — which is at times the case with Tesla. I'm not asking for 100 percent rigor and no pizazz, which often can be the case with dry subjects like insurance or banking," Cramer said. "I just think a little fun injects confidence into the proceedings, and in a world that lacks confidence, it's nice to hear it in a CEO's voice every now and then. It makes you feel more confident yourself, so if a stock gets hammered, like Netflix was today, you know that you should buy it into weakness."

Lightning Round: Getting Bearish on KMI?

In Cramer's lightning round, he rattled off his take on some callers' favorite stocks:

Kinder Morgan Inc.: "I didn't like what Goldman had to say about Kinder Morgan today. It made me very nervous. I think that there are some concerns there. That Goldman report was very cogent."

Littelfuse: "Emerson should go buy these guys. That's how much I like Littelfuse. And, by the way, did I say that I like Emerson? Emerson's on a major breakout here."

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