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Cramer Remix: Why SNAP can’t snap back anytime soon

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."

But Snap's stock is not the only one that has been subject to ruinous competition — Blue Apron and Ulta Beauty are also targets, though one may fare better than the other, Cramer said.

And while the IPO market might be seeing an uptick, Cramer worried about the lack of merger and acquisition activity, particularly when it comes to three key groups: energy, consumer packaged goods and retail.

"Each area needs growth in earnings and in sales, or at least one of those, and the only way to get it by now is to actually do deals, do deals with other companies in the industry," he said.

Depressed oil prices should be spurring some takeovers for the energy space, but if the sector's big dogs no longer believe oil could stay above $40 a barrel or if they know about pitfalls the market is not seeing, that could threaten the M&A prospects, Cramer said.

Save for the Amazon-Whole Foods deal, the food space has seen next to no major deals. Cramer argued that by pooling their resources, particularly if sales are declining, some consumer packaged goods names could restore hope of...