“Obviously somebody with a large share position who is also frustrated bought it and sold upside calls and trying to get some of the money back and protect themselves to the downside,” he added.
(Related: Facebook Will Disappear in 5 to 8 Years: Analyst)
Facebook stock traded at $21.75 per share at 3:30 p.m. ET.
Earlier, Bernstein Research upgraded the social media stock to “underperform.”
Trader Josh Brown called it “a half-hearted upgrade” for a business that has yet to be defined.
He further linked belief in the stock to the brashness of youth.
“There are guys that when you are younger you see a bar fight and get closer to it and you wade in a little bit,” he said. “When you grow up and you’ve been beaten up enough, you walk away from these things.
“What you are seeing here is a situation where they brought a momentum stock public six months later than when the momentum was petering out. I think the company has bright prospects, but people can’t get past the valuation now.”
Brown said a better play was in tech companies that operate behind the scenes to make the social media sites work, such as Palo Alto Networks .
“It had a really great reception on the IPO,” he said. “No controversy.”
Brown added that he was not recommending the stock.
Trader Stephen Weiss flagged a potentially powerful headwind: The end of the lockup period.
“That’s going to bring more stock into the market than is there right now,” he said. “The IPO did poorly. I’m not betting on three secondaries in the next few months doing well.”
Also, the ad business is not convincing to Weiss.
“My kids are 20 and 22’ and they and their friends and younger friends are all on it incessantly, actually way too much,” he said. “If you ask them if they click on the ads’ they will tell you, ‘What ads?’ They’re not even looking at them.”
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Trader disclosure: On July 31, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Steve Weiss is long JPM; Steve Weiss is short KORS; Steve Weiss is short JCP; Steve Weiss is short X; Pete Najarian is long AAPL; Pete Najarian is long C; Pete Najarian is long INTC; Pete Najarian is long SBUX; Pete Najarian is long FB; Pete Najarian is long MSFT; Pete Najarian is long PFE CALLS; Pete Najarian is long EBAY CALLS; Josh Brown is long AAPL; Josh Brown is long JPM; Josh Brown is long GDX; Josh Brown is long GLD; Josh Brown is long XLF; Josh Brown is long WMT; Josh Brown is long TGT; Josh Brown is long PFE; Steve Cortes is long PFE; Steve Cortes is long PPH; Steve Cortes is long DG; Steve Cortes is long DEO; Steve Cortes is short COH; Steve Cortes is short XGB VS. S&P LONG; Steve Cortes is short IWM;
For BRIAN NAGEL
A member of the household of an Oppenheimer & Co. Inc. research analyst who covers this company has a long position in JCP
For CHRISTIAN BUSS
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