Netflix Inc. (NFLX) is what all the Millennials are into these days, but TheStreet's Jim Cramer and TD Ameritrade chief market strategist JJ Kinahan say they have some concerns about this Millennial-themed stock.
Speaking at TheStreet's recent Financial Success Strategies teach-in in New York, Kinahan said that NFLX "is in a lot of ways" a stock of the future for Millennials who like to invest in companies that make products that they like.
"I wouldn't pay [for a Netflix subscription] for three years, but finally my kids were like, 'Dad, there's no way we're not getting this,'" Kinahan said. "So we got it."
He said Netflix manages to "appeal to people who want everything on demand. ... Many of us in this room I think are my age, [and] if you missed that show at 8 o'clock on Monday night, you missed the show. It's crazy when you think about that."
But Kinahan admitted that he shorted NFLX stock at first. "When Netflix was trading the first time it ran up -- it's got to be four years ago -- trading around $100, I'm like, 'Who the hell would pay $7.95 to watch movies?'" he said. "So I [short-sold] the stock, covered at $102. Sold it at $103, covered it at $105. Sold it at $107, covered it at $109."
However, Kinahan acknowledged that Netflix is trading close to double those prices today.
Still, he said the stock's future is not without challenges. "I think the tough thing for Netflix going forward is that the competition has gotten so great, and I think they're going to have a harder and harder time getting original content," Kinahan said. "They're going to have to, in my opinion, spend a lot more money on original content."
Netflix's original content has long been a driving force of its success with Millennials. The company recently disclosed that it plans to spend $8 billion to make its content library 50% original by 2018.
"I'm sure they have ways of measuring it, [but] at some point, we're going to have to see [if] is this paying off with the original content," Kinahan said.
Cramer agreed, adding that Netflix will have to increase its capital-raising efforts -- which could pose problems.
"There's no way they have the money to do what they have to do," Cramer said. "The market's been really receptive, so they're able to raise capital. But if they miss a quarter, they're not going to be able to raise capital. So I am concerned," Cramer said.
But even with possible capital concerns, Cramer said he's "reluctant to go against [Netflix], because my Millennial kids regard it as TV."
Cramer said his adult daughter recently told him she didn't want to subscribe to cable in her home, instead using a new flat screen television to stream Netflix. "The first thing she does is say: 'Dad, I'm going to save us $90 a month.' We only watch Netflix. And she doesn't hook up the cable," Cramer said.
Click here for more from TheStreet's Financial Success Strategies symposium.