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5 trades on tanking Twitter, Internet earnings

Twitter shares plummeted despite an earnings beat on Tuesday, and investors may want to run for the door if the drop continues, CNBC "Fast Money" trader Steve Grasso contended.

The stock initially rose in extended trading after Twitter easily topped Wall Street's earnings and revenue estimates. But Twitter quickly reversed—falling as much as 12 percent—after Chief Financial Officer Anthony Noto said on its conference call that the company would not see "sustained, meaningful" user growth for a "considerable period of time."

Read MoreTwitter shares sink 10% as execs warn on user growth

Twitter traded around $32 per share at its lows in after-hours trading. Grasso—who owns the stock—said that shareholders may want to sell their stake if it falls below $29.50, a level reached last year.

"You better bail if it pops through that," he said.

Twitter headquarters in San Francisco.
Adam Jeffery | CNBC
Twitter headquarters in San Francisco.

Yelp

Shares of consumer review platform Yelp also sunk in extended trading after earnings, falling more than 16 percent. The company posted a surprise loss, while third-quarter sales guidance was light.

Read MoreAfter-hours buzz: Yelp, Akamai, Panera & more

The stock has shed 51 percent in the last year.

"There doesn't seem to be a low that's low enough," said trader Dan Nathan.

Trader Pete Najarian agreed, saying the business has shown "deterioration."

Facebook

Social media giant Facebook has fared much better than Twitter or Yelp this year. Shares have risen more than 22 percent, and traders believe the run will continue after the company reports earnings Wednesday.

"I'm going into this bullish," said trader Pete Najarian, adding that Facebook has "taken over" social media.

"If you're still in the name, I think you've got to stick with it," added Grasso.

Disclosures:

Karen Finerman

Karen is long BABA, BAC, C, FINL, FL, GILD, GOOG, GOOGL, JPM, KORS, M, BABA puts, she is short SPY, Her firm is long ANTM, AAPL, BAC, C, DIS, FBT, FINL, FL, GOOG, GOOGL, GPS, IBB, JPM, KORS, M, MYL, PFE, SUNE, URI, XBI, KORS call spreads, SUNE call spreads, KORS puts, her firm is short IWM, SPY, MDY, Karen Finerman is on the board of GrafTech International.

Pete Najarian

Long AMAT, AAPL, BAC, BMY, BP, CSX, DISCA, DKS, FOXA, GE, KKR, KO, LLY, MRK, PEP, PFE, he is long calls AAPL, AGNC, AMKR, AXP, BAC, C, CRM, CY, DAL, DVN, ETFC, GILD, LC, LM, LULU, LVS, MU, P, PNR, RF, TWTR, UAL, USB, VZ, WYNN, XLF, ZIOP, he is long puts AUY, OAS, RIG. Today he bought GILD, P, and TWTR.

Dan Nathan

Dan is long QQQ sept put, CMG July weekly put spread, JOY sept calls, TWTR, TWTR sept call spreads, SO, BA sept put spread, COST Aug put spread, TJX aug put , PG july weekly put, SLB aug 28th put spread.

Steve Grasso

Steve Grasso is long AAPL, BA, BAC, DD, DECK, EVGN, FIT, KBH, MJNA, PFE, PHM, T, TWTR, GDX firm is his kids AMZN, IBM own EFG, EFA, EWJ, IJR, SPY