Netflix (NFLX) has plunged 74% in just over three short months from an all time high of $304.79 to its close Friday of $79.40. Nobody gets it all right, but I hate to see anyone on TV get away with claiming they did better than the truth. This article will take a look at what the documented record on Seeking Alpha says.
Did anyone make money with Netflix following Jim Cramer's advice? This article will show that many have a right to be upset with Cramer for being "loose with the truth". But if they bought when he first gave it a bullish call on TV, then they made money. Investors also have a right to be upset if they are still holding waiting for the bounce he recommended selling into last month. There was no bounce!
Here is Jim Cramer whining on Twitter Friday that he said "sell NFLX in the high $100s." (Click to enlarge)
Lucky for us, there is a well documented record on Seeking Alpha of what Cramer says every day on his show, Mad Money.
First we'll start with a graph of Netflix stock to match prices with date. I added the above chart to my "Jim Cramer Charts" on StockCharts.com with a note that Cramer liked Netflix after it started to run into visible trouble. From memory, it seemed like he couldn't stop talking about it and how much he liked it for most of 2010 and 2011. I don't subscribe to his "Action Alerts Plus" so I don't know if he had it in the portfolio or when he said to buy or sell there, but let's look at what he said on Seeking Alpha.
SA January 27, 2010: Cramer turned bullish on Netflix here near $50.
Bullish Calls on Netflix: "Netflix, blow out quarter… up $7, thank heavens I decided to no longer fight Netflix… I believe that the bears on Netflix have no idea about the power of their steaming video… they ought to be smelling the coffee, the java, the VIA, the Starbucks, the triple Latte Cappuccino with skim wet… because Netflix is going higher."
NFLX shares closed that day at $50.97 as the Yahoo data shows.
So far, Cramer is right that he recommended it at $50.
Netflix chart from January 2010 to October 2011 (Click to enlarge)
Did Cramer say to sell in the "high $100s" as he claimed on Twitter? Here's a list of Cramer's recent advice for NFLX. On August 9, 2011, Cramer said Netflix is a buy.
Netflix is growing faster than the economy, and like Google (GOOG), Apple (AAPL) and Amazon (AMZN), Netflix is a buy on its rapid growth. Cramer would use deep in the money calls to buy Netflix.
NFLX closed that day at $237.80 as the Yahoo! data shows.
September 16, 2011 is Cramer's first advisory to sell that I can find on SA.
Cramer put a post-it note on his head to express his regret for staying in Netflix after the company announced price increases for its DVD delivery service.
The faith in Netflix's management and the strength of its past performance led Cramer to be more bullish than he admits he should have been. "I was too greedy, the biggest sin of all."
Even though Netflix is likely to see another bounce, Cramer would sell the bounce and move on.
Here is what happened:
NFLX closed 9/26/11 at $132.22, not the high $100s!
Even worse, there was no bounce!
If there was no bounce of NFLX to sell into, wouldn't Jim Cramer's followers still be holding on to the shares waiting for a "bounce" to sell into?
On September 20, 2011, Cramer did indicate it was time to get out of Netflix:
Cramer explained that high growth stocks are what works the best in a slow growth environment. While it is time to get out of Netflix because of its self-inflicted woe, other high growth stocks are worth a look.
As the Yahoo! data shows, NFLX closed that day at $130.03 and opened the next day at $141.40 with a low of $129.03
so you could give him credit for a "SELL" at $130, which is hardly "the high $100s" as he claims.
Click to enlarge:
The above analysis shows that if you bought Netflix when Cramer first recommended it on January 27, 2010 and you are still waiting for "a bounce" to sell into, then you can be upset with Cramer for not saying sell right away at $132, but at least you have a nice gain. Sadly, how many bought near the top as the excitement peaked?
What bothers me is I can't find any record of Cramer recommending a sale of NFLX shares in the "high $100s" as he claimed Friday on Twitter. At best, I'd give him credit for saying it was "time to get out of Netflix" at $130 on September 20, 2011.
Disclosure: I am long GOOG.
