Cramer says Netflix’s plunge shouldn’t scare investors about the broader market

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CNBC’s Jim Cramer on Friday said investors should remain calm about the broader stock market as Netflix experienced its worst single-day decline in years, which wiped out gains through April 2020.

Netflix was down more than 25% from its daily lows to around $380 per share after subscriber numbers slowed after Bell Thursday. The company beat estimates for fourth-quarter earnings. It was in line with sales expectations.

Cramer said he doesn’t think Netflix’s disappointing results compare to other companies, and that the streaming video giant’s subsequent stock slide didn’t stop him from scouting for names to buy.

“Think about a year when that [market] Bubble was really inflated. Think about now, if the bubble kind of collapses — and now we should be worried,” the Mad Money host said ahead of Friday’s Wall Street opening. “I don’t mean to be quiet, but actually that’s what you have to do.”

Shortly after opening, Cramer told members of the CNBC Investing Club that he would be increasing three holdings in his nonprofit foundation: Bausch Health, Salesforce, and Marvell Technology.

Cramer warned investors not to listen to extreme market forecasts.

“If we’re selling because we hear people talking about how the market could go down 45%, that’s almost, that’s just irresponsible,” Cramer said, referring to a recent market forecast by notable investor Jeremy Grantham.

“If we sell because Netflix … most companies aren’t Netflix,” he added. While the streaming giant’s plunge pushed the Nasdaq further into correction territory, the broader market’s declines were not as severe.

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Wall Street analysts downgraded Netflix stock and lowered estimates after the company released a forecast for 2.5 million new subscribers in the current first quarter. Analysts had expected 6.93 million, according to StreetAccount estimates. Netflix added 8.28 million subscribers in the fourth quarter, which beat estimates but fell short of year-ago levels.

Netflix pointed to uncertainties surrounding the Covid pandemic and hinted at increased streaming competition as reasons for the dwindling growth. However, Cramer said the company’s offerings haven’t increased subscriber numbers either.

“In terms of igniting things, nothing seemed to matter,” he said, referring to the streamer’s recent hits, including international sensation “Squid Game” and “Don’t Look Up,” which hit A-listers -Actors like Leonardo DiCaprio and Jennifer Lawrence are featured.

However, Cramer said he remains more bullish on Netflix than Wall Street’s current projections because the company’s forward-looking statements have not always proven to be true.

“I’m not telling people to buy Netflix, but I’m saying that I don’t think historically, basing everything on their assessment has been a great way to invest,” he added.

Cramer made those comments on CNBC’s “Squawk Box” and “Squawk on the Street” on Friday.

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