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Is Twitter simply a craze?

(Click for video linked to a searchable transcript of this Mad Money segment)

Thelatest earnings from Twitter may contain a stealth but serious message.

Although results beat Street expectations, the report contained a metric that may be an early sign of something very problematic. That is, the company reported weaker than expected growth.

On the news, investors sent shares tumbling. By Thursday's close, which was one day after the release, the stock had declined by almost 25%.

Now chatter on the Street questions whether Twitter is more of a craze than a consistent business.

Chris Ratcliffe | Bloomberg | Getty Images

That's a problem because if Twitter is a craze, then growth will eventually level off.

In turn, that's a big problem because even after the sharp decline the company still commands a market cap of $27 billion.

According to published reports, to support even a valuation of $8 billion, Twitter will need to grow its revenues at a compounded growth rate of nearly 30% per year for the next ten years.

Therefore, if the company shows anything but fast growth going forward, Jim Cramer thinks Twitter bulls are facing serious headwinds.

"If that happens, the stock would be valued like any other stock. Giving it a multiple on earnings like Facebook, you'd come up with a $20 stock, Cramer said.

Now make no mistake, Cramer isn't saying Twitter is about to slide to $20. He's simply saying what could happen if growth at Twitter is really called into question.

"Personally I like the platform," Cramer added, "and I do think Twitter can growth into its market cap."

However the "Mad Money" host thinks some strategic changes are needed for that to happen. "The engagement's got to be made easier and the architecture less forbidding," Cramer said.

"That's what's needed for Twitter to get back on the growth path needed to take the stock back to where it was, just a short time ago," Cramer said.

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If you're currently looking to put money to work in an Internet stock, Cramer thinks Yelp warrants attention.

"Yelp reported outstanding numbers with revenue growing 72% year over year," Cramer said. "It had been growing at 65%."

That's an example of accelerating revenue growth, something Cramer often talks about as a key metric that's handsomely rewarded by the Street.

"I can see Yelp going to $100 in a relatively short amount of time," he added.



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