'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. 

Whole Foods Market (WFM) got hammered in the after-hours trading session after reporting less-than-stellar earnings results. Seymour pointed out the entire sector has been struggling and WFM trades with too high of a valuation. 

Grasso added that competition from other large grocers, such as Kroger (KR), is hurting sales at WFM. 

Adami admitted the quarter was "lousy" and said management should have pre-announced the results to warn investors. With that being said, he is a buyer of the stock near $41. 

Tom Forte, managing director at Tesley Advisory Group, called the selloff in Groupon (GRPN) a "tremendous buying opportunity." He added the Street is reacting very negatively to the recent earnings report. He pointed out that revenue, earnings per share and Ebitda all topped estimates. Although the turnaround will take time, he said it will be beneficial in the long run. 

Seymour said it will take too long for Groupon to change its business model. He suggested that investors avoid the stock considering earnings expectations were so low. Finerman suggested that Groupon is too expensive, given its fundamentals. 

Seymour liked the earnings report from First Solar (FSLR), but called the stock fairly valued at current levels. 

Finerman liked shares of Live Nation Entertainment (LYV) at current levels and said the company reported a solid earnings report. 

Grasso called shares of FireEye (FEYE) a "no touch" after it missed earnings estimates and broke through all of its key support levels. 

Adami said investors can buy TripAdvisor (TRIP) with a stop-loss near $75. The stock posted a large after-hours reversal to the upside following its earnings results and guidance, and he suggested that the stock has more "room on the upside." 

Activision Blizzard (ATVI) reported a "pretty good earnings report," according to Finerman, but she admitted the company will be spending a lot of money on promotions in the future. 

Barton Crockett, an analyst at FBR Capital Markets, has a buy rating on Disney (DIS) with a $96 price target. He was impressed with Disney's most recent earnings results since it posted strength in each one of its business segments. He is excited about the company's potential for sequels on its already successful movies, as well as its Star Wars lineup. He suggested that its ESPN unitt should allow the stock to trade with a higher multiple. 

Seymour seemed to agree, saying Disney reported a "good quarter." Grasso said content companies have continued to do well, and Disney is the "safe bet" in content. He suggested that the stock can go higher from current levels. 

Anthony Scaramucci, founder and co-managing partner of SkyBridge Capital, said JP Morgan Chase (JPM) and Barclays plc (BCS) are cheap on both a forward earnings and book value basis. He also likes Fifth Third Bancorp (FITB) and Regions Financial (RF). In regards to financial stocks in general, Scaramucci said they will perform better when net-interest margins increase as bond yields go higher, which he expects to be in six to twelve months. 

Grasso said Bank of America (BAC) and Citigroup (C) could "pop" going into the summer. 

For their final trades, Seymour was a seller of Petrobras (PBR) and Grasso was a buyer of Southern Company (SO). Finerman said to buy Google (GOOGL) and Adami was buying Anadarko Petroleum (APC). 


-- Written by Bret Kenwell in Petoskey, Mich.

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Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter.

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