With news that Twitter could potentially be sold to Salesforce.com, Alphabet or other unknown suitors, Jim Cramer was faced with a classic dilemma.
"Left to its own devices, Twitter should be lower, perhaps appreciably lower because it doesn't have growth and growth is the magic elixir that's required for all tech companies," the "Mad Money" host said.
Cramer has argued in the past that if Twitter's management thought bigger and made the platform easier to use, it could be so much more than what it is now. It could be used for the ultimate customer relations tool.
If you own Twitter, understand it's in rarefied territory.Jim Cramer
"It could be, shy of Facebook, the best way to get in touch with and learn from and teach customers about your product and what it can mean for them in a totally positive and intelligent way," Cramer said.
After the news broke, many critics questioned why any company would pay for a company like Twitter with such slow growth.
Cramer was inspired by the tweet of Vala Afshar, chief digital evangelist of Salesforce, who explained that Twitter has a personal learning network, the best real-time content for news, democratized intelligence and is a place to promote others.
"These are all the reasons why Twitter would be a great acquisition for any company trying to build a 360 degree, 24-7 relationship with its customers," Cramer said.
These four reasons are also why a Microsoft, Oracle, Verizon, Salesforce, SAP or Alphabet should be interested in acquiring Twitter, he added. However, it also makes the potential transaction very costly for the acquirer.
The problem is that Twitter has a massive amount of information, it just doesn't take advantage of it. It doesn't think about what it could do for targeted advertising.
"Everything comes at a price, and buying Twitter at these levels will crater earnings for at least several years while the business is fixed to bring in the kind of revenue I believe it can generate," Cramer said.
Ultimately, Cramer determined that it would be tough to get behind Twitter right now because it can only be recommended on a takeover basis. The fundamentals don't support its current valuation, though it is worth a great deal to some.
"If you own Twitter, understand it's in rarefied territory and I am thinking it's four, five points up, and three down down if nothing materializes," Cramer said.
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