Jim Cramer Tells Caller to Average Down on Netflix (NFLX)

On the August 11 episode of Mad Money, host Jim Cramer fielded a question from a caller who noted that Netflix, Inc. (NASDAQ:NFLX) was trading approximately 15% below their original purchase price and asked whether to hold or add to the position. Cramer responded:

Okay, but I've got strict rules in this. One is that we do not care where a stock has come from; we care where it's going to. And second, has the price-to-earnings multiple come down, or the earnings come down? Right now, the earnings are okay. The price-to-earnings multiple is at 20. So call me a beginning position in Netflix, and for you, maybe you want to buy a little more to average down.

M&A Noise and Broad Tech Rotation 

Cramer's willingness to recommend averaging down shows a consistent thesis he has defended throughout summer market volatility. On June 9, when asked about headwinds pressuring the stock after a 13% pullback, Cramer pointed to market anxiety over Netflix's earlier pursuit of Warner Bros. Discovery assets rather than operational decay:

Okay, I want to buy Netflix. The biggest headwind is that they went and got involved with trying to buy the Warner Brothers Studio, and everyone thinks, oh, they don't know what they're doing. I think they took the optionality that they had. They debated it. They made a decision, then they decided not to do it, because they're going to do fine. I think we're going to look back and think, wow, I bought it down 13%, not bad.

On June 30, as broad market sentiment turned cold toward megacap tech names, Cramer reiterated that macro selling pressure and residual deal anxiety created an artificial drag on the business:

People think the business has slowed. I disagree with that analysis, but you know what? The market has turned against the FAANGs. It's turned against the Mag Sevens. It's caught up in that negativity, and it can't seem to shake the fact that it was trying to buy Warner Brothers Discovery. They can't seem to shake it, and that's all she wrote.

Recent 2026 Analyst Caution Targets Engagement and Guidance

While Cramer views the compressed valuation as an attractive entry point, mid-2026 research updates from Wall Street desks highlight emerging fundamental headwinds. Following the company's Q2 2026 earnings print in July, Benchmark maintained a Hold rating, noting that engagement growth was just 2% year-over-year in the first half of the year as subscriber additions in core North American and European markets normalized.  Similarly, KGI Securities downgraded Netflix, Inc. (NASDAQ:NFLX) from Outperform to Neutral in July 2026, mentioning potential top-line deceleration in the absence of major blockbuster releases. Analysts at Guggenheim also trimmed their price target to $75 in July 2026 while maintaining a Buy rating, pointing out that narrowing full-year revenue guidance and scaling content amortization costs could limit immediate margin expansion even as ad-tier monetization develops.