On Wednesday, Facebook reported an earnings beat, but the stock seesawed as investors balked at the company’s core website revamp.
Despite the fact that the social media colossus reported a 48 percent rise in advertising and forecast a strong growth story, the narrative that it was losing total user time on its platform because of the overhaul reigned supreme.
Cramer pointed out that Facebook CEO Mark Zuckerberg had prepared Wall Street for the trade-off ahead of the report, saying that the decline in hours would come hand-in-hand with fixes to the user experience.
“A lot of these negative commentators say things like, ‘The daily user trend’s bad news.’ But Facebook told us point-blank that it doesn’t expect to see any sort of long-term slowdown in daily active user growth,” Cramer said.
Moreover, the actual improvements will reduce the number of advertisements and viral content on Facebook. The company’s Chief Operating Officer, Sheryl Sandberg, said on the post-earnings conference call that they could lead to “more monetization opportunities” — music to Cramer’s ears.
“A better user experience does translate to more users, which translates into, guess what? More money,” the “Mad Money” host explained. “The truth is, there’s no immutable law of the universe that says things have to go wrong.”