How to trade battered growth stocks

Another day of gains for markets Wednesday failed to convince some "Fast Money" traders that momentum stocks will rebound.

Major U.S. averages closed the day slightly higher, following gains of more than 2 percent each on Tuesday. Stocks have started to stabilize following a rocky start to the year.

That volatility has clobbered high-growth names like Amazon, Netflix and Tesla Motors. The stocks have shed at least 14 percent of their value each this year.

An employee secures customers' orders with bubble wrap before they are shipped at the Amazon Fulfillment Center in Tracy, Calif.
Fred Greaves | Reuters
An employee secures customers' orders with bubble wrap before they are shipped at the Amazon Fulfillment Center in Tracy, Calif.

Amazon

Investors should hesitate to buy Amazon now due to its valuation, argued trader Brian Kelly. Amazon Web Services — one of its growth engines — could face increased competition, he said.

"There's absolutely no way in this envrionment that you should be out tomorrow buying it," Kelly said.

Trader Guy Adami agreed, saying the stock is in "no man's land."

Netflix

Netflix shares have been "meandering" around $95 this year, and the company needs to "prove itself" in its first-quarter results for the stock to rise again, Adami contended. Netflix closed Wednesday above $97 per share.

But if Netflix can "execute," particularly on international expansion, its shares could rise above $110, argued trader Pete Najarian.

Tesla Motors

Tesla Motors shares rebounded Wednesday, a day after they fell as short-seller Citron Research revealed a position in the electric automaker. The stock closed up about 1 percent, above $188 per share.

Kelly was skeptical about Citron's rationale for shorting Tesla, as the firm's executive editor Andrew Left outlined a less-specific case than he has for other positions. He contended that Tesla is worth owning long-term, but not until it pulls back closer to $120 per share.

Trader Steve Grasso also argued that the stock does not look appealing at its current price.

Disclosures:

Guy Adami

Guy Adami is long CELG, EXAS, GDX, INTC, Guy Adami's wife, Linda Snow, works at Merck.

Steve Grasso

Steve is Long AAPL, BA, BAC, CC, DD, DIS, DECK, EVGN, KBH, MJNA, MU, OLN, PFE, PHM, T, TWTR, GDX firm is long CXO, OXY, BP, CVX, RIG, FCX, AMZN kids own EFA, EFG, EWJ, IJR, SPY

Brian Kelly

Brian Kelly is long BBRY, Bitcoin, GLD, SLV, TLT, US Dollar, Yen; he is short Aussie Dollar, BLK, British Pound, CS, DB, Euro, EWH, FRC, Hong Kong Dollar, UBS, SPY, Yuan, 5-Year Note Futures

Pete Najarian

Long AAPL, BAC, BMY, DIS, DISCA, GE, KMI, KMI-A, KO, MRK, PEP, PFE, SAVE, VIAB, he is long calls AAL, AMJ, BAC, BHP, DAL, EMR, FDX, GDX, GE, HAIN, HBAN, LC, MDLZ, MPZ, NRF, POT, RHT, SLV, SWN, UAL, USG, WMB, WPX, WYNN, ZIOP, he is long puts DB, EWH, RIG, VLO.