"Look at that thing, that thing is a beast, at least they saw this one. I am glad they got us out of the water.
"Those things are just submarines, however long they are, the roundness of them as well ... they are big, big beasts."
Fanning, who famously punched the shark that attacked him in 2015, said he did not panic, but also saw the amusing side of lightning very nearly striking twice once he was on a boat.
The incident came a day after a mako was spotted 90m from Filipe Toledo, while Julian Wilson - who was surfing against Fanning during the 2015 attack - was in the water.
Fanning's bid to win a fourth J-Bay Open came to an end at the hands of 2014 world champion Medina.
Medina enjoyed one long tube ride and a series of big sweeping turns and floats to lay down an 8.5 and 8.9 as Fanning struggled to pick up good scores.
Defending champion Fanning blamed his own errors for the loss as well as the improved form of Medina.
"I picked the right turn at the wrong time on the first wave, then got a lip in the head on the second wave and kneed myself in the face," he said.
"Gabe is getting more bite out there now ... I felt for a little while he was flat on the water but now he is back to his old self again."
Joining Medina in the semifinals is young gun Frederico Morais, who won a storming heat with a perfect 10 on his final wave to end the hopes of world champion John John Florence.
After needing a combination early in the heat, the Portuguese rallied on his final two waves with a 9.77 and 10 to defeat Florence.
Morais ripped a series of huge turns to get his first perfect 10 on tour, but admitted that after seeing the shark he had reservations about getting in the water.
"I'll be honest, I hate sharks. We don't have to worry about that in Portugal so I am not used to that," he said.
With Florence out Australia's Matt Wilkinson will likely keep the leader's yellow jersey and face Wilson in a quarterfinal.
