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Netflix deserves the benefit of the doubt, despite subscriber slowdown, Jim Cramer says

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Key Points
  • Netflix shares dropped 7% after the company posted its earnings report, but CNBC's Jim Cramer argued its a mistake to give up on the stock.
  • "After the incredible performance this company's given us over the years, you've gotta remember that doubting Netflix has been a mistake every step of the way," Cramer said on "Mad Money."
  • Cramer projected that Netflix will reverse its subscriber woes with the release of new productions, relieving worries about attracting viewers to the platform.

In this article

VIDEO3:5203:52
Jim Cramer reacts to Netflix earnings: Must-see content will bring new subscribers

CNBC's Jim Cramer came to Netflix's defense Wednesday after shares of the streaming giant sold off on its first-quarter report.

The stock plunged more than 7% since the report came out after Tuesday's close, despite the company beating estimates on the top and bottom lines. Investors were disappointed by softer-than-expected subscriber growth and an uncertain future in the short term, Cramer noted.

"After the incredible performance this company's given us over the years, you've gotta remember that doubting Netflix has been a mistake every step of the way," Cramer said on "Mad Money."

Netflix reported having 208 million paid subscribers at the end of March, a 14% increase from a year ago but short of the 210 million figure the company expected.

Despite the dip in subscriber growth, CFO Spencer Neumann said on the conference call that "business remains healthy," engagement is increasing and customer turnover is declining.

"To me, that says 'please, don't panic' ... I think they'll find a way to jumpstart new sign-ups with must-see content, whether they create it themselves or have to license it from someone else," Cramer said. "In other words, I am giving Netflix credit for something that doesn't exist yet, something that will make us feel compelled to subscribe despite all the competition."

Earlier Wednesday, Cramer said Netflix stock could potentially drop to $490 a share, though he remains bullish in the long run. Netflix shares finished at $508.90 on Wednesday, down 14% from their peak trade in January.

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