The streaming giant soundly topped profit estimates in the third quarter, but the "Mad Money" host isn't convinced the "better-than-feared" numbers were strong enough to take the company out of the penalty box given another period of subscriber woes ahead of the coming deluge of new players in the space.
Netflix shares rallied nearly 2.5% to $293.35 in Thursday's session. The stock closed about $15 below its intraday trading high.
"You've got to understand what Netflix is up against because when you look at these numbers in context I think they're pretty discouraging," he argued, adding "I wouldn't short Netflix here, too risky, but until we see how they handle Disney and Apple, I absolutely wouldn't want you to own it, either."
In anticipation of big brand competition entering the video subscription arena, Netflix's quarter didn't yield a lot of confidence in its business, Cramer said. The platform's kryptonite, he suggested, will be the cheaper price tag and deep libraries of content that will come with Disney+ and Apple TV Plus when both streaming services launch within the next month. AT&T's WarnerMedia and Comcast's NBCUniversal also have their own platforms in the pipeline.
In the September quarter, Netflix delivered a 43 cents earnings beat as it posted profit of $1.47 per share. Revenue came in at $5.24 billion, which just missed expectations, according to Factset. Netflix added 6.26 million new subscribers to its international base. The sour part, however, was the 517,000 new domestic sign-ups, which was more than 55% short of expectations. That follows the 2.7 million new accounts that was short of an 5 million add-ons expected in the July quarter.
"Even before the Disney-Apple tag-team enters the ring, this company's already facing some real headwinds," Cramer said. "So even though they reported a decent earnings beat last night, all anyone cared about were the anemic subscriber numbers."
Netflix conceded that price increases in the U.S. earlier this year affected subscriber retention and that new streaming services could cause "some modest headwind to our near-term growth" in a letter to shareholders.
Macquarie Research downgraded the stock to neutral from buy and reduced its price target to $325 a share from $375.
The company is forecasting a total of 7.6 million new paid subscribers in the fourth quarter. Management guided for 600,000 new domestic sign ups, while analyst consensus is 715,000, FactSet said.
Shares of Netflix are up almost 10% year to date, but the stock is down nearly 20% since it first missed on subscriber growth in its second quarter three months ago.
"Put it all together and I think Netflix has reached a point of saturation domestically," Cramer said. "Why not give Netflix more credit for its incredible profitability? Well, because this is a subscriber growth story and if you value the stock on earnings" it's at 53 times next year's numbers.
Disclosure: Cramer's charitable trust owns shares of Apple and Disney. NBCUniversal is the parent company of CNBC.