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Cramer: Amazon's dreaded two words that sunk the stock

Cramer: Amazon's two dreaded words that sunk the stock

As soon as Jim Cramer heard the dreaded words "cuts forecast" from Amazon on Thursday, he knew the stock would get clobbered.

When a company announces worse-than-expected numbers and then cuts the forecast, that is just what happens, Cramer said.

Amazon's shares fell more than 5 percent in after-hours trading on Thursday after it reported third-quarter earnings per share of 52 cents, while analysts expected 78-cents a share. Revenue came in at $32.71 billion versus $32.69 billion expected, according to Thomson Reuters consensus estimate.

On the flipside, Alphabet reported sharply better-than-expected numbers, and the stock went up in after-hours trading.

There was another category of earnings that caused stocks to jump, and Cramer found it quite peculiar — the category of "not as bad as we thought."

In the land of the blind, the one-eyed restaurant chain is indeed king
Jim Cramer founder and CEO Jeff Bezos
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Twitter almost pulled this off on Thursday as its stock flew in the morning because the trajectory of its daily average users was actually positive. Wall Street expected the company to report a horrendous number, but that didn't happen.

"It genuinely wasn't as bad as I expected it to be. Twitter did beat on both revenue and earnings. Plus, I think that this number makes it more likely that Twitter can come back into play … especially if they develop something that can use machine learning to actually knock off the trolls," the "Mad Money" host said.

Twitter's stock initially soared on the results, but as soon as investors learned that it would shut down Vine, the rally reversed.

Cramer expects that potential acquirers could again return for Twitter, as closing Vine and reducing the workforce while showing growth could make it more attractive to buyers.

Buffalo Wild Wings was another "not as bad as we thought" contender that rose 6 percent on Thursday. Initially, management predicted its franchises' same-stores sales would shrink 1.7 percent this quarter. So, when the company reported they fell 1.6 percent, the stock flew.

"That is a negative sales number; mind you … It is almost stupefying isn't it? But that is how bad the industry is. In other words, in the land of the blind, the one-eyed restaurant chain is indeed king," Cramer said.

So, while it is always great to report better than expected numbers, Cramer is willing to settle for "not as bad as we thought." Lately that seems to be driving stocks higher, and the strategy is working.

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