Competition might be great for consumers, but one particular type of competition is awful for businesses, threatening their stock prices, profitability, and more, Jim Cramer said.
"I'm calling it blindside competition," the "Mad Money" host said. "And though most investors don't even realize it or understand it, this is the competition that is playing havoc with the stocks of a few very highly visible companies in this market right now."
This competition is the kind that drives stocks down even when business does not look so bad. Snap was an easy example for Cramer, who called Morgan Stanley's Tuesday downgrade of the stock an "obituary" on CNBC's "Squawk on the Street."
Since Snap's initial public offering, Facebook has relentlessly rivaled the social media company, offering free advertising spots on Instagram to companies that pay to advertise on Snap.
And while the app might be popular and cool among young generations, "SNAP is anything but profitable," Cramer said. "One thing we all know: you cannot compete with free. If you open up a lemonade stand on your corner and you're charging 25 cents per cup and then a young Mark Zuckerberg in a hoodie comes along across the street and starts giving his stuff away, you're done."