What does Facebook have to do with Netflix? (NSDQ: NFLX) Everything, according to CNBC’s Mad Money anchor Jim Cramer (see video below), who told viewers Monday that the coming wave of social-media IPOs will trigger a “valuation revolution” that bodes well for the streaming service.
As Cramer sees it, the robust launch of Demand Media (NYSE: DMD) last week will be the first of a bunch of private companies going public that he rather loosely categorized with the “social media” label. While he mentioned Zynga, Groupon and Skype, he seized on Facebook in particular as a company that could command such a massive market capitalization that Netflix, which Wall Street should love for its subscription revenues, will shine by comparison.
Then came this jaw-dropper: Cramer suggested Netflix, which some analysts are already warning is overpriced, could very well double. He went on to bash the bears for never understanding the company’s potential.
“The coming wave of social media IPOs will change the way we look at many stocks and make us willing to pay a whole lot more for them,” said Cramer. “You have to learn how to look at stocks like Netflix through the lens of Facebook and the other social media names and not through the jaundiced eyes of the bears who have been wrong about this company for ages.”
Netflix dropped 3.90 on Monday to close at 214.08.