Mad Money

Twitter's enormous red flag—stop insider selling!

Cramer: Show some forbearance on this stock
Cramer: Show some forbearance on this stock

Jim Cramer's memo to the board of directors at Twitter: Stop the insider selling. If not for the sake of Twitter stock, do it for your own portfolios!

The "Mad Money" host would like to see a moratorium on selling the stock for at least six months to a year, so that the board can show it believes in the stock again. The recent activity has created an enormous red flag, and it is counteracting the good news that has surrounded the stock recently.

"There's no reason for a rich guy like Jack Dorsey, the chairman, to necessarily sell 75,360 shares of stock as we just learned, or for CEO Dick Costolo to unload another 125,000 shares as was reported last week," Cramer said.


Twitter finally made a game-changing move last week when it reported earnings and topped analyst estimates. This proved that business could return and at a strong growth rate.

Cramer thinks that the stock jumped when all of the short sellers who assumed Twitter would screw it up again—and had shorted the stock prior to earnings—were forced to cover their short positions.

But what Cramer loved the most, is that it was as if Twitter finally got "religion." The board finally figured out that earnings and growth actually matter. In a CNBC interview with Carl Quintanilla, Costolo confirmed that January showed continuous growth and acceleration as well.

Cramer was also rejuvenated by Twitter when it decided to reorganize timelines for easier use, and its deal to surface with Google showed that the platform is morphing into a news service.

"Still, though, when I see these big insider sales from these very rich people, I am kind of aghast and it makes me feel that they don't believe; hence the suggestion of moratorium," said Cramer.

What the heck, Costolo?

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All of this recent activity adds up to good news for Twitter, in Cramer's perspective. But the good is being counteracted with the insider selling.

"Give it a rest, guys. You might end up getting higher prices for your sales next year at this time, especially if you have more quarters like this one," Cramer said.

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