Cleveland-Cliffs (CLF) stock plummeted 5.38% in pre-market trading on Tuesday, following a downgrade from Wells Fargo. The steel manufacturer's shares are under pressure as analysts express skepticism about the company's recent developments and potential returns.

Wells Fargo has lowered its rating on Cleveland-Cliffs from "equal weight" to "underweight," while maintaining a price target of $11. The downgrade comes as analysts question the market's reaction to recent announcements by the company. Wells Fargo analyst Timna Tanners stated, "The share move looks to us like an overreaction to an MOU with a foreign steel mill and potential rare earth deposits." The brokerage remains skeptical about attractive returns from the region, citing a lack of information provided by the company on other deposits.

The downgrade and subsequent stock decline come despite Cleveland-Cliffs reporting a narrower third-quarter loss than Wall Street estimates on Monday. The company's stock had been performing well year-to-date, with shares up approximately 72% before this recent setback. Investors will be closely watching how Cleveland-Cliffs responds to these challenges and whether it can address the concerns raised by analysts in the coming days.