NEW YORK (Real Money) -- So they are going to make a stand today. Morgan Stanley is trying to start it with the Hold-to-Buy upgrade on Yelp (YELP - Get Report) and the Sell-to-Hold on Twitter (TWTR - Get Report).
I think it is well-timed. Twitter hit my downside target yesterday of $29, and I am not going to say that I still hate it as much, because I am sure there are companies that will begin to actually think about buying Twitter if they can figure out how to monetize it. Remember, Facebook (FB) agreed to pay $19 billion for WhatsApp, and that company had little revenue. I think that Twitter could be worth the same amount, which is $2 billion more than where Twitter shares are trading. If the stock goes down another $4 or $5 and stays there, it isn't unthinkable. I do not think Twitter is a great short anymore.
Yelp's down to $3.75 billion market capitalization. I can see Yahoo! (YHOO) or Google (GOOGL) paying that price for the company if the stock keeps dropping. Again, I now think that stock is a bad short. It is soon going to be too valuable to someone else.
Must Read: Kass: Facebook-WhatsApp Fallout
I am talking about trajectories here, and velocity. These companies were all told that, in order to get their stocks to run, they should be like Amazon (AMZN). So they adopted the Amazon model. They have all come along far enough that they have built moats that could proceed to be exploited by a flush Yahoo! or a rich Apple (AAPL).
Remember, I am not saying to buy. I am saying these stocks can bounce -- and I am certainly saying that, while they had been overvalued, these companies have built amazing businesses that are envied by the biggest players.
No, don't buy them for takeovers. The valuations are still too high. But at this pace, that won't be for long -- and you don't want to be caught shorting a company that could turn out to be valuable to a bigger company that wants to own a growing space.
At the time of publication, Action Alerts PLUS, which Cramer co-manages as a charitable trust, was long FB, GOOGL and AAPL.
Editor's Note: This article was originally published at 7:12 a.m. EST on Real Money on May 8.