Cramer: Mark my words—Twitter could fizzle & fail

Cramer: Is Twitter whistling past the graveyard?
Cramer: Is Twitter whistling past the graveyard?   

Jim Cramer will admit that he has been a long-time user of Twitter and a long-time believer in its stock. And while it could be an incredible product, these days it seems more like Avon—which has been crushed for years because of awful management.

Cramer thinks the product is fantastic, because he sees so many people in media that are literally begging users to follow them by featuring his handle and asking people to participate in quizzes and polls. It's free promotion that most companies would kill to have.

"I think Twitter might kill the golden goose itself, purely out of arrogance, mismanagement, and a mistaken belief that they are always going to be the only game in town," the "Mad Money" host said. (Tweet This)

That is precisely why Cramer was so happy with the announcement that Dick Costolo is stepping down, because he has never heard more complaints about a CEO in business than he has about him.





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Cramer was also severely disappointed with Twitter's reaction to Costolo. He would have expected the company to kick out Costolo, and then bring in a CEO with a plan to restore user and ad growth. Did that happen? Nope!

Instead they said that Costolo had debated stepping down for six months, yet somehow the company was completely unprepared to name a new CEO. To make matters worse, Cramer was outraged that Costolo will be staying on the board of directors—which will ultimately make sure that no real changes will be made to the company.

"Sorry, Twitter, but this is insane. First, how could they not have relieved Costolo immediately when he started debating whether or not to quit?" Cramer asked.

In his opinion, the dumbest move possible would be to leave Costolo on the board of a floundering company. That is a blatant admission that the company thinks nothing is wrong.

Cramer saw the same ridiculous action when Andrea Jung stepped down as CEO of Avon and then stayed on as an executive chairwoman, which defeated any actions taken by new CEO Sheri McCoy.

"That stock's been pulverized beyond recognition. Twitter now feels like Avon to me. Maybe they should call it Twavon," Cramer added.

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There are some investors who have great ideas about saving Twitter, Cramer said, such as the major shareholder Chris Sacca. However, it appears that Twitter is just too arrogant to accept any constructive criticism, even from a large stakeholder like Sacca.

"Mark my words, if Twitter doesn't get its act together, it will be the first big fizzle of the second Internet revolution," Cramer said.

While the "Mad Money" host is unable to sell his position from the charitable trust, he is officially warning investors that he is worried that the company is overvalued due to mismanagement and missed opportunity. The fact that the stock didn't move with a change in management last week means it is in much more trouble than Cramer thought.

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