Jim Cramer's Mad Dash: Buy Netflix When It's Down

NEW YORK (TheStreet) -- Shares of Netflix (NFLX) are moving higher after Morgan Stanley initiated the stock with a buy rating and assigned a price target of $500.

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.

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

At the time of publication, Cramer's Action Alerts PLUS had no position in companies mentioned.

More from Opinion

Red Hat CFO Tells TheStreet: Tech Trends Are Still in Our Favor

Red Hat CFO Tells TheStreet: Tech Trends Are Still in Our Favor

Throwback Thursday: Intel Edition

Throwback Thursday: Intel Edition

Intel's Next CEO Should Try Harder to Protect Its Flanks Against AMD and Others

Intel's Next CEO Should Try Harder to Protect Its Flanks Against AMD and Others

3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio

3 Warren Buffett Stock Picks That Could Be Perfect for Your Retirement Portfolio

Wednesday Wrap-Up: GE and Facebook

Wednesday Wrap-Up: GE and Facebook