'Fast Money Halftime' Recap: Etsy Plunge Raises Questions of Internet Bubble

NEW YORK (TheStreet) -- Shares of online arts and crafts marketplace provider Etsy (ETSY) took a dramatic plunge Wednesday after the company's posting of disappointing first-quarter results. This marked the company's first quarterly release since going public with great fanfare last month. The CNBC "Fast Money Halftime Report" trading panel weighed in on whether the Etsy news is the harbinger of an Internet bubble -- one that's about to implode.

The newly minted public company had priced its shares at $16 for its IPO only to have its stock close at $30 on the first day of trading. Yet on Wednesday during intra-day trading, Etsy's share price declined to $15.70, on the heels of the company's first-quarter performance. Etsy had a net loss of 84 cents a share on revenue of $58.5 million, although analysts had expected a net profit of 3 cents a share on $59 million in revenue. 

So, given Etsy's recent performance and that of online-storage company Box (BOX),the CNBC panel was asked if investors are facing another Internet bubble. Box's stock traded at $23.15 on its first trading day after the company priced its shares at $14 for its January IPO. The share price is now only in mid-$16 range.

"Etsy is not indicative of what is going on" with Internet IPOs," said Josh Brown, CEO of Ritholtz Wealth Management. 

Stephen Weiss, managing partner of Short Hills Capital, characterized the current situation as one of investors chasing the hot names of pre-IPO companies and then jumping on them when they go public without doing their homework to research the company's financials. Said Weiss: "The market is in great shape. This Etsy [post-IPO performance] is meaningless)."

Sharing that sentiment that retail investors are blindly chasing sexy pre-IPO names, Pete Najarian, co-founder of Optionmonster.com, said, "Everyone wants to be a venture capitalist and chase an IPO at any price."

Guest panelist Michael Santoli, a senior columnist for Yahoo Finance, said the situation is not so much one of an Internet bubble but rather the result of second-tier companies' going public rather than first-tier ones. "The IPO market is unhealthy because there aren't enough deals," he said. 

The "Fast Money" panelists also focused on the retail industry, specifically the merits of Target (TGT), which reported stronger than expected first-quarter results on Wednesday. They compared Target's attractiveness with another big-box store retailer Wal-Mart Stores (WMT), which had reported on Tuesday disappointing quarterly results.

Jim Lebenthal, the CFO and chief invetment officer of Lebenthal & Co, currently owns shares of Target and said he believes retail stocks overall will pick up now as consumers feel the impact of lower gas prices and have greater discretionary income as a result.

Lebenthal said he believes consumer activity will migrate up the retail chain, with customers moving from spending money at discounter Wal-Mart and allocating their dollars to Target.

Weiss added that Target is in growth mode, where as Wal-Mart is shrinking the number of its stores. Najarian weighed in saying, "Target is a must-own name."

Target's CFO John Mulligan, in an interview on CNBC, said the retailer performed well in its areas like wellness products and baby and children's goods, but did not so much in its grocery efforts. In 2015, Target plans to test and learn from recalibrating its food strategy.

Airlines represented the biggest laggard sector of Wednesday, after Southwest Airlines (LUV) had on Tuesday discussed increasing its capacity. The panelists largely tagged efforts by airlines to increase ridership capacity as either a neutral to good move.

"They should add capacity to meet the demand," said Lebenthal. "Before when the airlines added capacity, it was viewed with doom." Wall Street's concerns center on the added cost of airlines' adding capacity and whether this will drive down the revenue to be realized per seat.

Weiss said that the airlines are already flying at capacity and adding more capacity may generate additional revenue. He even put his money where his mouth is.

"I own American and this morning I bought Delta," Weiss declared.

Referring to other stocks, Brown said to avoid Staples (SPLS), Lebenthal said he would own shares of Salesforce.com (CRM) regardless of whether the company ultimately is acquired, and Najarian said investors should own Yahoo's  (YHOO) stock if they can acquire it at $40 to $41 a share. 

And in making their final trade remarks, Brown said Sirona Delta Systems (SIRO) looks incredible, Weiss reiterated his fondness for Delta (DAL), Najarian pointed to semiconductor companies like NXP Semiconductors (NXPI) and Texas Instruments (TXN) as worthy for investors to explore. Lebenthal, unlike Brown, said he believes Staples will grow from here.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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