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'Fast Money' Recap: Valuation Matters for Tesla

NEW YORK (TheStreet) -- While the Nasdaq slumped 0.32%, the S&P 500 climbed 0.56% on Wednesday. 

On CNBC's "Fast Money" TV show, Guy Adami, managing director of stockmonster.com, said "valuation suddenly seems to matter" for shares of Tesla Motors (TSLA). Without its upside momentum, investors have to wait for a large-volume day where the stock reverses to the upside before getting long. 

Steve Grasso, director of institutional sales at Stuart Frankel, pointed out how well shares of Tesla have held up compared to many other "momentum" stocks over the past month. 

Brian Kelly, founder of Brian Kelly Capital, said investors are no longer willing to "stand for this type of uncertainty." Specifically regarding Tesla, he was referring to costs, sales volume and the Gigafactory as shareholder uncertainties. 

Karen Finerman, president of Metropolitan Capital Advisors, warned that shares of Tesla have not gone down nearly as much as they could, and a "collapse" in the stock price is still in the realm of possibilities. 

Ben Kallo, an analyst at R.W. Baird, has a buy rating on shares of Tesla with a $275 price target. He said the company reported a great quarter, guided for strong deliveries in the next quarter and is "firing on all cylinders." Although R&D spending is expected to increase and possibly took investors by surprise, Kallo said it is "necessary" for the company and its international expansion plans. He suggested buying the stock near $175. 

Turning to SolarCity (SCTY), the company beat on top-line expectations while once again surprising analysts by raising guidance. Kallo has a buy rating on shares of SolarCity with a $75 price target. He added the stock has more room to the upside and analysts will need to hike their price targets. 

Grasso said the $175 level in Tesla Motors coincides with the 200-day simple moving average. However, he admitted that that level may fail to hold as support. 

Kelly pointed out how poorly SCTY has traded compared to TSLA over the past several months, adding that the latter could have further downside ahead. 

Adami said the S&P 500 has been rather "impervious" to the selloff in momentum stocks but admitted the pressure is currently to the downside for the broader market. He argued that good, but not great earnings results and slower than expected growth could be a negative for stocks. 

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