Mad Money

Cramer: Facebook face-off with IBM, Google & Twitter

Cramer's faith in Zuckerberg

Though the stock market may be an complex animal with many complicated facets, Jim Cramer keeps it real. Let's face it, everything comes down to trust.

Do you trust that Mark Zuckerberg and the Facebook team will lead you to a fortune down the road?

Can Dick Costolo and the Twitter team keep the company growing and show it is valuable?

Do you have faith that that Larry Page at Google will provide benefit, when the company is spending a ton of money on projects that aren't valuable currently?

Do you believe Virginia Rometty and IBM will do anything but buy back stock to hit company estimate targets?

"These are the issues swirling around all of these stocks, and I think they have to be dealt with case by case. Only then can you figure out whether a company's stock is worth owning or worth avoiding," Cramer said.

Facebook founder and CEO Mark Zuckerberg speaks during an interview at the Newseum in Washington.
Andrew Harrer | Bloomberg | Getty Images

First, let's start with Facebook. The company released beautiful numbers on Tuesday that made investors think that it will have rapid growth in the years ahead. That tune quickly changed, and the stock tanked more than 6 percent on Wednesday.

What happened?

Though Zuckerberg said many positive things on the conference call, people heard a different story. They heard that it will be dramatically ramping up expenses to keep the company growing for the next five years. Investors were additionally freaked out when they realized that 178 million shares from the What'sApp acquisition will hit the tape soon.

"I ask you, what do you want from Facebook? Do you want it to just coast? Is that the ticket?" Cramer asked.

Looking at the plan, Zuckerberg wants to first connect people and then turn them into a business.

Though many investors were shocked that Facebook hadn't already turned its followers into a business, Cramer was impressed. Isn't that what you should want a CEO to think about for a five-year plan?


Now, in contrast, let's look at a few former market golden children. Remember when IBM's five-year plan was to buy back shares, and Wall Street was head over heels in love? Well, it turns out that got them to the lowest rung of the .

How about Twitter? "All I can say after listening to its call is that I wish it had a plan, let alone a five-year plan. How about a five-month plan?" the "Mad Money" host said.

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As for Google, it had many of the same things to say on its call that Facebook did, hence the stock was slammed. However, it bounced right back.

Cramer thinks Facebook will also bounce right back. It has faster growth than Google at a much less reasonable price. Growth these days is more valuable than price.

The importance of leadership cannot be denied. The question comes down to, do you trust the CEO?

"There's a plan, and if you have faith in Zuckerberg, as I do, then you buy in, not out, of the Facebook ecosystem," Cramer said.

In his perspective, this is just the cost of growth over a reasonable time frame in order to become a great company.

Call Cramer: 1-800-743-CNBC

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