- "Mad Money" host Jim Cramer has changed his tune on Snap almost 2 months after comparing the company to the early days of Facebook.
- Cramer identifies the app's unpopular redesign as the main culprit and says the stock is too expensive at the moment.
- He says he would consider buying in the future.
- Watch Snap trade in real time here.
Jim Cramer is turning his back on Snap.
The "Mad Money" host, who sometimes has enough influence to move stocks, likened the company to an early Facebook after the company's fourth-quarter earnings report showed revenue surged 72% versus a year ago.
"Sure, I was a skeptic, but after this quarter, I'm now a believer,"Cramer said on "Mad Money" following the report. "In many ways, Snap reminds me of where Facebook was years ago when the company finally figured out how to address its mobile problem. So even though the stock skyrocketed up an astounding 47 percent today, it's got a lot of run room and it is a natural to be bought."
But Cramer's opinion appears to have changed in the wake of the Snapchat's redesign. He now worries that advertisers will abandon the Snapchat app if user engagement declines as a response to the redesign and negative celebrity tweets.
The December app redesign spurred controversy by splitting up media and celebrity stories from the user's personal contacts. In late February, celebrity user Kylie Jenner tweeted her own opinions on the change and said she no longer uses the app as a result of the update which led to a 7% decline in shares.
Other celebrities have since voiced their displeasure with the redesign.
After spiking more than 40% following its fourth-quarter results, Snap shares gave back all of those gains as the redesign continued to receive bad reviews. But Cramer says shares are still too expensive.
"The stock is not cheap here,"Cramer said on "Mad Money" last Tuesday. "I say take a pass — for now — at least until we know whether the Snapchat redesign will actually hurt them. I think it's a little bit too risky."
He added, "At a certain price, it is time to hit the buy button."
Snap is scheduled to report its first-quarter results on May 1. Wall Street is expecting an adjusted loss of $0.17 a share on revenue of $243.85 million.
Snap shares are up 7.15% this year.
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