CNBC’s Jim Cramer Had This to Say About Netflix

It was on Tuesday that CNBC’s Jim Cramer said on “Squawk on the Street” that “Netflix has become an open sore to this market.”

It was on Monday that Netflix lost all of its gains for the year and entered negative territory. Shares have fallen almost 30% since April, around the time when Disney revealed its $6.99 price for its new streaming service Disney+. Disney’s service is expected to launch in November.

“In order to keep up with the other companies, they think they have to spend more,” said Cramer. “I often think, no, they have to be a little more clever with their spend.”

Netflix was also hit with a loss in the number of U.S. subscribers and a large miss on international subscriber adds in the second quarter.

“The signs-ups are going to start going down, and this thing’s controlled by the sign-ups,” Cramer said.
Cramer admitted that if he owned any Netflix shares he would sell them.

Shares of Netflix tumbled to their lowest level yet on Tuesday.

According to Cramer, investors need to be cautious as more and more stocks are being valued based on
measures other than the revenue or earnings numbers.

“You have to be skeptical of markets, entire markets, where more and more stocks are valued on something other than earnings,” explained Cramer. “The more stocks that trade on weird metrics, the more likely it is that the market’s overvalued.”

Disclaimer: We have no position in Netflix Inc. (NASDAQ: NFLX) and have not been compensated for this article.