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TheStreet Open House

'Fast Money' Recap: Impressive Alibaba

NEW YORK (TheStreet) -- The stock market slipped lower on Tuesday, with the Nasdaq falling 1.38% and S&P 500 closing lower by 0.90%. 

Alibaba filed for its initial public offering on Tuesday and was the first topic of discussion on CNBC's "Fast Money" TV show. 

Tim Seymour, managing partner of Triogem Asset Management, said Alibaba reported "very impressive" metrics in its F-1 filing. He said the IPO will go well. He added that Alibaba could come public with a market cap near $190 billion. 

Guy Adami, managing director of stockmonster.com, said he's "clearly missing something." He argued that if Alibaba IPOs with a market cap even close to $175 billion, shares of Yahoo! (YHOO) should be above $40 due to its 24% stake. 

Karen Finerman, president of Metropolitan Capital Advisors, suggested that shares of Yahoo! aren't trading higher because investors are unsure of what management will do with the proceeds of the Alibaba IPO. 

Steve Grasso, director of institutional sales at Stuart Frankel, still owns a small long position in Yahoo!. He said the stock should be trading between $42.50 to $45, given the potential valuation of Alibaba. 

Sam Hamadeh, CEO and founder of PrivCo, was a guest on the show. He said Alibaba's audited F-1 filing confirms the impressive estimates on which many investors have been relying. He is valuing the online retailer at $195 billion, partly due to its investments in other growth companies. Alibaba has 80% of the Chinese e-commerce market, he concluded.

Robert Peck, managing director at SunTrust Robinson Humphrey, was a guest on the show. He has a buy rating on Yahoo! with a $40 price target. He called the Alibaba IPO  "unique for American investors." He said Yahoo! will sell 9% of its stake and use the money to return to shareholders and possibly make acquisitions. The rest of its stake will be held as a long-term investment. 

Turning to Twitter (TWTR), shares slumped 18% on Tuesday amid the large share lockup expiration. Peck has a neutral rating on Twitter with a $50 price target. He argued the company is growing revenue and Ebitda at a fast pace. Twitter needs to find a way to grow its user base in a significant way but has a few quarters to figure out how to do so, he suggested. 

Mike Khouw, managing director and primary strategist at Dash Financial, said investors who have losses on their Twitter investment can use options to repair the losses on a move higher: 

The strategy is called a two-by-one call spread, where investors would sell two September $40 call options at $2.25 for every September $33 call option they buy for $4.50. 

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