Last year, Snapchat's revenue growth increased by an astounding 589 percent, though the company is still not yet profitable. Its daily active user base rose to 158 million in the latest quarter, up from 107 million the year before, although the growth has decelerated a bit in the past couple of quarters.
The slowing user growth could potentially be a real issue, Cramer said.
Last summer, Facebook's Instagram launched its own Instagram stories platform, which appeared to be a knock-off of Snapchat. Cramer attributed this as the reason why Snap's daily active user base increased by just 10 percent in the first half of 2016 to the second half, compared to 33 percent in the previous six months. The other reason for deceleration was due to performance issues on Android phones.
Another possible problem that Cramer uncovered is the immense amount of spending that Snap is doing on cloud-hosting costs. In the next five years, it expects to spend $400 million annually on Google Cloud and another $200 million annually on Amazon Web Services.
Meanwhile, Snap only expects to hit $1 billion in ad revenue this year. This means at least 60 percent of that will be eaten up by hosting costs.
"Nevertheless, I think the good absolutely outweighs the bad here, at least for the near- and intermediate-term future," Cramer said.
While Snap's user growth is still impressive, it has plenty of opportunity to expand internationally. Any company with the immense amount of revenue growth must be doing something very right, Cramer said.
Additionally, Goldman Sachs is one of the underwriters of the IPO and estimates that Snap could hit approximately $2 billion in revenue by 2018. Even better, Snap could be a great investment if it uses the billions they expect to raise in the IPO to expand new lines of business, and those businesses are successful.
Regardless of the long term, Cramer expects Snap to be a "phenomenal trade" and its stock to soar when it comes public. Snap is also coming public about a year earlier into its cycle than Twitter did, which means investors can tap into the juicy early-stage growth.
"If Snap spikes really hard right out of the gate, I suggest waiting for a pullback before you buy or accepting that you missed it if the stock is more than doubled at the opening," Cramer said.
Ultimately, Snap is expected to price on Wednesday within an expected range of $17 to $18, which would put its market cap at $20 billion. Based on that IPO price, Snap would trade at 20.3 times this year's sales, which sounded expensive initially to Cramer, but compared to Facebook's 19.4 times sales when it came public, it's not exactly uncharted territory.
"I could see it doubling pretty easily simply because big firms that got a huge slug of stock in the deal will go into the regular market to buy more, so their cost basis will be superb versus the actual closing price," Cramer said.
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