Jim Cramer Says Netflix Will Suffer When Sports Comes Back

Jim Cramer weighs in on Netflix ahead of its earnings report Thursday.
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Netflix reports earnings on Thursday.

The streaming giant reported its biggest quarter ever in terms of new subscriber growth -- the key metric that tends to drive its stock price. Owing to COVID-19 lockdowns, Netflix more than doubled its initial subscriber guidance for the first quarter, reporting 15.77 million new paying subscribers.

The company cautioned that its subscriber growth will decelerate as lockdowns ease, guiding for 7.5 million new subscribers in Q2. But with COVID-19 still on the rise in the U.S. and elsewhere, that forecast could again prove too conservative

Wall Street's current consensus is for 8.58 million new subscribers added in the second quarter, reflecting high expectations heading into earnings. So, according to TheStreet's Annie Gaus, one big thing to watch will be international growth.

She also noted that investors should keep an eye on free cash flow. Netflix's Q1 showed better-than-expected free cash flow. The company said that it will burn $1 billion or less in 2020, in large part due to delays in production. It finished 2019 with $3.3 billion in negative free cash flow, but said in its 2019 full-year update that cash flow is steadily improving owing to its "growing operating margin and profits."

And, finally, keep an eye on forward-looking guidance.

But what will Jim Cramer watch for in the streaming giants earnings report?

Watch the video above for more.

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