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Summary:

What does Facebook have to do with Netflix? (NSDQ: NFLX) Everything, according to CNBC’s Mad Money anchor Jim Cramer (see video below), who…

Jim Cramer

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.

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  1. Valuation does not change the bottom line Cramer.

    Do you honestly think folks are going to be “willing to pay” almost 90 times the bottom line value of a stock?

    The “fastest growing business in the world” could be buried in a heartbeat by a Google, Apple, or Amazon?

    The only reason Netflix is still in the water is because its competition has been “nice”.

    …..and now that they are about to be “not so nice”…. You suggest to buy them?

    I think you need to break out your “other set of eyes” buddy and get out of the long postion on NFLX.

  2. If netflix could be like apple to make more contracts with movie-copy-rights owner and issue a news about every contract they made(just make some noise),its stock is expectable.Netflix needs more good movie in their inventory.

  3. thinktwicebforetalking Thursday, March 10, 2011

    Jay, competition hasn’t been nice rather the opposite is true: Hollywood is interested in their own platform to stream, Ultraviolet, Amazon, Google, or Apple want in but this is not as easy as. I have the computers, I have internet, I am in the Cloud, I have money, etc. Have you ever worked in a huge IT project. I have running over 1,000 Enginners for just one project. Besides Jim Cramer is starting to think like a consumer: Oh yah, one recent movie for $3US only, OK I’ll get 20 a month or 60US$ a month. For this I would be wise to subscribe to NFLX and add 2 US$ to get this movie offered by FB + up to 59 more PLUS the susbription to the rest. So 9US$ versus 60US$? I know you might say that the 20 RECENTLY RELEASED movies I get from Netflix come in DVD BUT if I love to watch a lot of movies I’ll be better oof getting the DVD to see how NFLX adds more recently released movies to the stream queue.

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