"Take the home run. Don't go for the grand slam. Take the home run. You've already won. You've won the game. You're done," Cramer said on "Squawk on the Street."
"Please don't lose a lot of money on GameStop," added the "Mad Money" host. Cramer, who's being treated in the hospital for a pinched nerve, said he called into CNBC in hopes of making sure people recognize the potential downside risk in GameStop and other soaring short squeezed stocks.
"Don't let them get hurt. It's our job" to make sure people know they may get burned if the stock price collapses, he said.
Cramer's comments came as GameStop shares were soaring again Friday, up more than 60% to above $300 apiece. The surge follows the decision by Robinhood to allow its users to more freely trade the stock, one day after the popular brokerage app restricted buying in GameStop and other stocks that had become incredibly volatile during a wave of retail buying and short squeezes fueled by Reddit's WallStreetBets forum.
GameStop and other affected stocks like AMC Entertainment tanked during Thursday's session, though it's worth noting that GameStop has gained 1,500% year to date and AMC has increased 475% in 2021.
"Congratulations to them. We all wish people can make as much money," Cramer said of the retail traders profiting off the stock surges, although he acknowledged he prefers investors doing so through gains in names with better fundamentals like Apple and Microsoft.
"I'm not against anybody [who is long the stock] and there's no vast conspiracy against me or GameStop or anybody else. There's just a very overvalued stock," he said.
At the same time, Cramer said he believes GameStop should be using the rapid appreciation in share price to issue new stock and potentially pay down debt. The company's fiscal fourth quarter ends Saturday.
As of Oct. 31, GameStop's balance sheet contained $269.5 million of short-term debt and $216 million of long-term debt, according to its fiscal third-quarter earnings release.
On Dec. 8, GameStop filed with the Securities and Exchange Commission to be able to sell common stock from time to time in "at-the-market offerings." The stock closed the session before the SEC filing at $16.35 per share.
Cramer said he was concerned about the stability of the rest of the U.S. equity market the longer the frenzied trading continued.
"Nobody wants to do anything that's commonsensical here and you've got these two sides duking it out, and it's just a tragedy that it's going on like this," Cramer said.
"I'm not saying that Reddit is good or bad, or that the shorts are good or bad," he said. "I'm just saying that the government has to step in and at least try to address the situation so the rest of the market isn't panicked by four stocks that are heavily shorted."
Short selling is a strategy in which investors borrow shares of a stock at a certain price in hopes that the market value will fall below that level when it's time to pay for the borrowed shares.
Some of the hedge funds that were short GameStop indicated they've closed their positions. Even so, Cramer said there needs to be more sunlight on what's happened in recent days. "The short sellers, let's find out who really covered that short at what price. Let's have some disclosure. Let's have a government investigation of how the trading went so this doesn't happen anymore," he said.
Correction: GameStop's fiscal fourth quarter ends Saturday. An earlier version misstated the day.