Netflix (NFLX) has spent 2026 testing the patience of its own shareholders.
The stock that once traded like it was unstoppable is now down more than 40% over the past year, and it sank again after the company’s latest earnings report.
However, Jim Cramer is stepping in to defend it.
On the July 20 episode of CNBC’s Mad Money, Cramer told viewers that Netflix has fallen far enough and deserves a fresh look.
His message was blunt: “This is not a broken company.”
That single line captures the tension surrounding NFLX right now, as the business keeps growing and the stock continues sliding.
Why Jim Cramer is defending Netflix stock
Cramer’s case starts with Netflix’s valuation.
After its long retreat into the high-$60s, Netflix trades at roughly 19 times forward earnings estimates, its cheapest level since 2022, 24/7 Wall St reported.
For a company still posting double-digit revenue growth, that is a valuation normally reserved for slower, more mature businesses.
More Netflix Coverage:
- BofA trims Netflix stock target while betting on a rebound
- Netflix just made its slowdown harder to measure
- Netflix chases Letterboxd in a telling move for NFLX stock
Cramer’s point is that the market has punished the stock far harder than the underlying numbers justify.
He conceded that the recent quarter was a disappointment with weakening content, but he pushed back hard on the idea that Netflix has lost its footing as a business.
What actually spooked investors after Netflix’s earnings
To understand Cramer’s call, you have to understand why the stock fell in the first place.
Netflix’s second-quarter report on July 16 delivered earnings of $0.80 per share on revenue of $12.56 billion. That’s up 13.37% from last year, according to the company’s SEC release.
Growth was spread across every region. The problem was the outlook, not the quarter itself, and Cramer laid out the bear case that has weighed on sentiment:
The concerns dragging NFLX lower
- Slower guidance. Netflix trimmed its full-year revenue growth outlook, a signal that reaccelerating sales growth is getting harder.
- A softer content slate. The recent pipeline has not been strong enough to keep viewers from canceling.
- Less disclosure. Netflix moved its “What We Watched” viewership data to an annual release, on top of already dropping quarterly subscriber counts. That reduced visibility unsettled Wall Street.
- A missed deal. Cramer argued Netflix passed on a chance to lock down Warner Bros. content before walking away from talks.
The disclosure change stung the most. When a company gives investors less data to measure, uncertainty rises, and uncertain investors sell first and ask questions later.
Netflix shares slid more than 10% on July 17 before closing near $68.95, erasing roughly $35 billion in market value at one point.
The bull case Cramer says the market is ignoring
Cramer argues that the same report that scared investors also shows a company using its cash aggressively and expanding into higher-margin businesses.
Netflix repurchased $4.7 billion of stock during the second quarter, its largest quarterly buyback ever, with about $27 billion still authorized.
Related: Netflix’s Roku loss points to bigger streaming risk
Buying back stock during a sell-off lowers the share count and lifts per-share earnings over time. It also signals that management believes the stock is cheap.
As Cramer put it, there is a reason these executives are buying at the fastest pace in the company’s history.
Where Netflix still has room to grow
Cramer pointed to three aspects that remain intact:
- Advertising. Netflix expects ad revenue to roughly double to $3 billion this year. The company’s management says the gap between its ad tier and ad-free plans is narrowing.
- Scale. The company captures only about 5% of global television viewing time, leaving a long runway across live programming, gaming, and sports.
- Reach. Netflix is approaching an audience of nearly 1 billion people, with household penetration still under 45% of its addressable market.
Bank of America made a similar argument. Analyst Jessica Reif Ehrlich kept her Buy rating even while trimming her target, saying the stock fell faster than the business behind it.
How Netflix stock stacks up against the market
The disconnect becomes clearer when you compare NFLX to the broader market over the same period.
While the S&P 500 has held up through 2026, Netflix has moved the other way sharply:
Netflix vs. the market in 2026
- Past week: NFLX down about 8%
- Past month: NFLX down roughly 13%
- Year over year: NFLX down about 40%, versus the S&P 500’s 16.58% gain.
That gap is the main point of Cramer’s thesis. A stock can fall for valid reasons and still become heavily oversold, and he believes Netflix has done exactly that.
What Cramer says investors should do next
Cramer’s advice comes with a clear warning.
He does not expect a fast rebound and cautioned that the weakness “could stick with us for a while.” So his strategy is deliberately cautious.
Rather than buying a full position at once, he recommends starting small and adding gradually on further price dips.
That approach lowers your average cost of entry if the stock keeps falling.
For the bull case to pay off, a few things still need to happen:
What has to go right for NFLX
- Netflix has to actually double its ad revenue toward the $3 billion target.
- Engagement growth needs to stabilize after the recent slide.
- The company must hit its third-quarter guidance to rebuild trust.
None of that is guaranteed. If ad growth stalls or content doesn’t improve, a cheap stock can stay cheap for a long time.
The practical takeaway is to separate the two stories.
Netflix as a business is still profitable, growing, and buying back stock. Netflix stock, on the other hand, is caught in a confidence problem that may take several quarters to resolve.
Cramer’s bet is that patient investors who slowly buy the dip will be rewarded when confidence returns, and it depends on whether Netflix can prove its growth engine still has room to run.
Related: Netflix stock shows recovery signs after bombshell takeover report
