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Cramer pinpoints the key strategy driving Netflix's success

In light of Netflix's strong earnings report, Jim Cramer knows CEO Reed Hastings understands three things: content can be king, people love bargains, and bigwig money managers will invest in internet stocks with promise.

"Netflix is, to the naked eye, a two-pronged success. If your company can produce local content that people love worldwide and you only charge them $8 or €8 a month, you'll land and expand. You'll grow and grow and grow," the "Mad Money" host said.

But the third element, the willingness of Wall Street financiers to catch and pay for the next hot internet-related trend, was what really drove Hastings' success so far, Cramer said.

By using technology to deliver popular programming, Netflix was able to capture investors' attention (and wallets) despite losing swaths of money on production expenses.

"As Reed says, 'Negative free cash flow will be an indicator of enormous...


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