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There is a method to Google's spending madness

Cramer: Why Google deserved to rally today

What the heck is going on with Google?

Contrary to popular headlines, Jim Cramer thinks this stock is actually a steal. Many investors were left perplexed as the company reported a big miss in the headlines on Thursday night. The stock initially plummeted in the after-hours and then exploded on Friday.

"When I tell you not to trade off the headlines, not to pull the trigger on buying or selling a stock until you've listened to the actual conference call, this kind of action is exactly what I'm warning you about," said the "Mad Money" host.

The investors who sold Google in the after-hours on Thursday spent the day licking their wounds on Friday.

So why did Google rally, despite missing headline numbers?

An employee walks through the lobby of Google's Washington, D.C., headquarters.
Getty Images

The big difference, according to Cramer, was the change of tone from management on their conference call. In the past, management has acted like they are too cool for school and they don't like to explain themselves or act like they care about the share price of its stock.

But this time around, Chief Financial Officer Patrick Pichette and Chief Business Officer Omid Kordestani held investors' hands and walked them through everything. They told investors exactly what they wanted to hear.

Pichette painstakingly went over all of the details on the problems caused by a strong dollar, as well as each one-off cost incurred to make sure investors understood that the underlying results of the company were actually pretty good.

"I just can reiterate the same message that I give on a regular basis, which is share price does matter. It matters to our board. It matters to all of us. We're all shareholders in the company," Pichette said.

Now, Cramer is not saying that Google rallied only because of an attitude change in management. There were key metrics in the earnings that made the stock rally, too.

Google's revenue increased by 18 percent, year-over-year, while the cost per click was down 3 percent on overseas currency issues and the aggregate number of paid clicks was basically in line.

The company's mobile business is also doing extremely well, with mobile shopping traffic doubled versus last year. Not to mention that YouTube is totally on fire—surpassing a billion users and the average watch time increasing by 50 percent. One can only imagine how that will skyrocket with Super Bowl ads.

Even after the rally on Friday, Google only trades at 15.5 times next year's earnings estimate. That makes it cheaper than the average stock on the based on 2016 numbers.

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Yet this is a far superior company and has a much faster growing rate.

"I think the stock remains a steal at these levels, although, of course, I'd always like it even more if it gets slammed the next time we have a marketwide selloff like we did today.

So, contrary to popular headlines, Google actually reported a solid quarter. Cramer thinks this stock deserved to rally on Friday, and there could be much more to go.

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