'Fast Money' Recap: Amazon Stumbles

NEW YORK ( TheStreet) -- The markets sank Tuesday on doubts about the eurozone debt talks.

The Dow Jones Industrial Average plummeted 207, or 2.74%, to 11,706.62. The S&P 500 dropped 25.14, or 2.10%, to 1229.05. The Nasdaq lost 61.02, or 2.26%, to 2638.42.

Simon Hobbs, the moderator of CNBC's "Fast Money" TV show, began the show with Amazon.com ( AMZN), whose shares were falling after missing estimates on the top and bottom lines.

Joe Terranova said the disappointing report will lead to lower price targets and a downgrade of the stock on Wednesday. He said investors will be watching closely to see if the stock falls below its technically important Oct. 4 price point of 200.43.

Terranova said investors are demanding better margins and profits from a mature, richly valued company.

Colin Gillis, an analyst with BGC Partners, said Amazon is an unbelievably expensive stock. He said the company is seeing a slowdown in revenue growth and could possibly lose money in the December quarter.

He said Amazon is facing higher shipping costs and doesn't provide visibility into what it is doing with the Kindle Fire in this economic environment. He said he doesn't expect to see a lift in its margins anytime soon.

Karen Finerman hammered away at the stock's high valuation. Drawing a comparison to Walmart's ( WMT) earnings growth between 2001 and 2011, she said Amazon would have to sustain a compound annual growth rate of 23% over the next 10 years to justify its price.

For a breakout of some stocks from a recent "Fast Money" TV show, check out Dan Fitzpatrick's "3 Stocks I Saw on TV."

3 Stocks I Saw on TV

CNBC reporter Jon Fortt, who was listening in on Amazon's conference call, said the company touted its growth rates were the highest since 2000 and that it was seeking to broaden the range of the Kindle to include ads and media. He said the company acknowledge a slowdown in electronic sales growth.

Ron Insana said investors need to be selective in the tech space. He said Apple ( AAPL) is OK and liked Microsoft ( MSFT), Intel ( INTC) and even Cisco ( CSCO).

With the market plunging on concerns of the shape and substance of a euro debt agreement, Finerman said everything hinges on Europe. She was skeptical whether a universal solution to end the crisis will materialize on Wednesday.

Terranova said the S&P will have to hold at 1195 to have room to go to the upside, while Dan Nathan said the Wednesday summit is setting up for a disappointment. Adami also was bearish on the outcome, saying any solution will lead to a rise in rates.

Sony Kapoor, managing director for the Re-Define think tank, also said any agreement will come up short of what is needed to resolve the crisis.

Brian Kelly said it will be a deflationary event no matter what happens. As a result, the U.S. and U.K. will fan inflation when they begin printing money. He said the best trade in this inflationary environment will be gold, an asset in undersupply.

Isana said that Europe's problems won't be resolved until the ECB moves to a zero interest rate policy and quantitative easing. Under these circumstances, he expects investors to return to the U.S. markets, which look good by comparison.

Netflix ( NFLX) took another drubbing today, falling 35%. Mike Vorhaus, of Magid Advisors, said the turning point for the company came when it decided to change its pricing structure for DVDs and streaming, which caused a subscriber blacklash that it is still reeling from.

He said Netflix is in a tough position where Hollywood is demanding more money for content that its subscribers want.

Hobbs brought in Jeff Hirsch, author of the Stock Trader's Almanac, to comment on the recent run in small cap and tech stocks. Hirsch said the market has been following a seasonal pattern and should set up for a bullish run from November to January.

Looking ahead to Ford's ( F) earnings on Wednesday, Efraim Levy, an analyst with Standard and Poors, said he expects the auto company to put up solid numbers. He said Ford is solidly positioned with a healthy balance sheet and an attractive valuation.

He said Ford's auto has enjoyed strong sales in the U.S. but is looking to China and Asia for further growth. He has a 12-month price target of $17 for the stock.

He said the auto sector has rebounded, making stocks like Ford, General Motors ( GM) and Johnson Controls ( JCI) attractive.

In the final moves, Dan Nathan expects Wednesday's eurozone debt agreement will be disappointing and advised getting into weekly puts. Adami liked General Mills ( GIS). Finerman said she was selling a little of Macys ( M). And Terranova liked Juniper Networks ( JNPR).

-- Written by David Tong in San Francisco.

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