Cramer says Netflix's plunge shouldn't scare investors about the overall market

CNBC’s Jim Cramer said Friday investors should remain calm about the overall stock market despite Netflix’s worst single-day decline in years, which was wiping out gains back to April 2020.

Netflix, at its lows of the day, was down more than 25% to roughly $380 per share, following slowing subscriber growth numbers after the bell Thursday. The company did beat estimates on fourth-quarter earnings. It matched expectations on revenue.

Cramer said he doesn’t believe Netflix’s disappointing results are analogous to any other firms, and the streaming video giant’s ensuing stock slide has not stopped him from looking for names to buy.

“Think about a year ago when the [market] bubble really was being inflated. Think about now, when the bubble’s kind of come down — and now we’re supposed to be worried,” the “Mad Money” host said before Friday’s open on Wall Street. “I don’t mean to be calm, but actually that’s what you have to do.”

Shortly after the open, Cramer told CNBC Investing Club members that he was adding to three holdings in his charitable trust: Bausch Health, Salesforce and Marvell Technology.

Cramer cautioned investors against heeding 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 an irresponsible thing to say,” Cramer said, referring to a recent market prediction made by notable investor Jeremy Grantham.

“If we’re selling because Netflix … most of the companies aren’t Netflix,” he added. While the streaming giant’s plunge was knocking the Nasdaq further into correction territory, the broader market’s declines have not been as severe.

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

Netflix pointed to uncertainties related to the Covid pandemic and hinted at increased streaming competition as reasons for its dwindling growth. But Cramer said the company’s offerings also haven’t driven subscriber numbers.

“Nothing seemed to matter in terms of igniting things,” he said, referring to the streamer’s recent hits including the international sensation “Squid Game” and “Don’t Look Up,” which stars A-list actors including Leonardo DiCaprio and Jennifer Lawrence.

However, Cramer said he remains more optimistic about Netflix than current Wall Street forecasts, since the company’s forward-looking statements haven’t always proven true.

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

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

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