Tesla Falls, but Wall Street's Really Pounding This Beaten-Down Stock

The stock market has had the jitters this week, and Wednesday didn’t give investors much more in the way of confidence. Extremely high expectations for short-term interest rates have more people convinced that a recession is imminent, and that sent some market benchmarks lower. The Nasdaq Composite (^IXIC 0.40%), however, managed to limit its losses to just 0.1% as of 1:15 p.m. EST.

Tesla (TSLA -0.34%) was in the news again on Wednesday, in part for some bad news for its vehicle fleet and in part for a negative call from a Wall Street stock analyst. However, the biggest declines came for a much smaller Nasdaq stock. Below, you’ll learn more about Tesla’s latest woes and then discover which stock was a big decliner on the day.

Tesla deals with investigations and a downgrade

Shares of Tesla were down nearly 4% early Wednesday afternoon. The electric vehicle stock had to deal with a couple of challenges, one related to its business and one motivated by investor sentiment.

On the news front, Tesla had to deal with an investigation from the National Highway Traffic Safety Administration concerning its Model Y mass market SUV. According to the agency’s Office of Defects Investigation, there have been a pair of reports in which the steering wheel became detached from the steering column in Tesla Model Ys from the 2023 model year. It appears that Tesla might have failed to install a retaining bolt correctly that would have more firmly attached the steering wheel to the steering column. Unlike most of the problems found in Tesla vehicles recently, this one would require actual physical intervention in a potential recall rather than simply a software update.

Meanwhile, analysts at Berenberg downgraded Tesla stock from buy to hold early Wednesday morning. However, the analysts also raised their price target on the stock by $10 to a new level of $210 per share. That suggests that Berenberg isn’t uncomfortable with the current price but sees little reason for further optimism after the big rebound in Tesla stock over the past couple of months.

Even with the issues affecting Tesla, the relatively muted downturn on Wednesday shows that investors still have some confidence in the stock’s ability to hold its own in a tough market environment. Some pullback isn’t surprising after a big jump in February, but Tesla will have to demonstrate its ability to keep its business moving forward in order to justify further gains.

WW takes a big hit

Meanwhile, shares of WW International (WW -4.68%) dropped 22%. The parent company of the WeightWatchers service gave back a big portion of its gains from Tuesday’s session as Wall Street analysts warned that the previous day’s move might have been exaggerated.

WW shares jumped 79% on Tuesday after the company said that it would acquire telehealth platform provider Sequence, which concentrates on chronic weight management. The company said that it believed the move pushed WW back into its core area of expertise.

However, analysts at Craig-Hallum expressed their skepticism about the extent of the price move, downgrading WW stock from hold to sell and keeping their price target of $4 per share. Even though Craig-Hallum noted that the Sequence acquisition could potentially provide some upside for WW’s business, analysts there believed that the size of the move higher in the stock price was an overreaction.

WW has struggled to find a consistent strategy for years. With the stock still down 95% from its highs in 2018, it’ll be hard for the business to regain enough traction to make long-term shareholders happy.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.