The Nasdaq Composite (NASDAQINDEX:^IXIC) found itself in the line of fire again on Thursday afternoon, as the stock market once again gave up early gains to fall in the afternoon. Many market participants blamed the downturn on comments from Fed chair Jerome Powell that failed to provide much confidence in the central bank's ability to navigate a reflationary environment. As of 2:30 p.m. EST today, the Nasdaq was down almost 2.5%, officially undergoing a 10% correction from its all-time highs just last month.

Investors appear to be losing confidence in the high-growth stocks that helped the Nasdaq soar last year, and Tesla (NASDAQ:TSLA) in particular failed to provide much defense from the market rout. Meanwhile, Okta (NASDAQ:OKTA) suffered declines despite posting strong growth in its underlying business, showing that traders are focused on short-term trends rather than where companies are headed in the long run.

Tesla heads downhill

Tesla was down more than 7% on Thursday afternoon, approaching $600 per share for the first time since December. The once high-flying electric vehicle (EV) pioneer's stock has lost its upward momentum, and some are now starting to look more critically at the prospects for its core auto business.

Blue Tesla Model S on a road with sun near horizon.

A Tesla Model S. Image source: Tesla.

Traders are looking at several stories as potential downward catalysts. Rising competition from established automakers could eat into Tesla's market share, prompting reassessments of the EV giant's ability to sustain a competitive moat. As other automakers develop EVs, moreover, they might not need to purchase as many of the regulatory emissions credits that Tesla generates and sells to them. That would eliminate a key source of high-margin revenue and profit for Tesla.

From a long-term investing perspective, however, the bigger issue seems to be whether Tesla's share-price advance in 2020 outpaced the gains in its intrinsic value. Even after the decline, Tesla stock is up more than 600% since the beginning of 2020. If you'd said early last year that Tesla shares would triple in 15 months, shareholders would've been ecstatic and felt vindicated for their belief in the company. But a triple from early 2020 would still be a more than 50% drop from current levels.

Tesla's fundamental business is continuing to gain ground, and in the long run, that should show up in stock performance. But that doesn't mean short-term volatility will come to a quick end.

Okta can't climb despite growth

Meanwhile, Okta shares were down 7%. That was especially disappointing given good performance from the cybersecurity company's underlying business in its most recent financial results.

Okta saw 40% revenue growth in the fourth quarter, capping a 43% growth rate for its just-ended fiscal year. The company managed to post fourth-quarter adjusted earnings of $0.06 per share, reversing a year-earlier loss and marking an important milestone in the company's financial history. Free cash flow was up almost 80% year over year during the quarter.

In addition, Okta announced an acquisition. The company will pay $6.5 billion in stock to acquire identify-platform provider Auth0, with Okta CEO Todd McKinnon saying that the buy should help enhance the Okta Identity Cloud with developer-centered capabilities.

Some investors might not have been happy to see Okta use its stock as currency, especially given that the company has more than $2.5 billion in cash and short-term investments available. Yet if buying Auth0 can keep Okta's growth rate rising, today's drop could prove to be just a blip in the cloud-based identity protection company's long-term trajectory.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.