TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, took a closer look at this "cult stock" on CNBC's "Cramer's Mad Dash" segment. The adoption of the Netflix service is very strong, he said, adding that a lot of consumers, including those that are global, like the programming.
However, Cramer said this is not an earnings-per-share story. Rather, the company seems to be valued by the number of subscribers it has.
Netflix could be a possible takeover target one day too, and a higher subscriber count will certainly boost its valuation.Investors buying the stock have to "accept the faith" that Netflix will continue to grow its subscriber base, Cramer said. If the company fails to impress the Street with this metric, the stock will go down. His main problem is that investors are excited about the stock right now, near its all-time highs, and didn't want to buy the stock on its previous selloff. "You want to buy when it's down, not when it's flying," Cramer concluded. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell Angie's List Gets Boost on Tech M&A: Tuesday's Chart of the Day United Pilots: We Flew to Chengdu on a Boeing 787 and Loved It Priceline Was a Winner for Investors Even Before OpenTable Buy Red Hat Stock Ahead of Earnings Before It Gets Red-Hot