Tesla’s ( TSLA ) share price’s sharp decline this year is starting to catch the attention of valuation watchers.
“Tesla hasn’t traded at these levels since 2018,” Wedbush analyst Dan Ives wrote in an email to Yahoo Finance. “On an EV/EBITDA [earnings before interest, taxes, depreciation, and amortization] basis, it’s the cheapest valuation to date.”
Ives, a former Tesla bull who made headlines in mid-November for removing the EV maker’s stock from Wedbush’s Best Ideas list, isn’t too far off from Tesla shares being remarkably cheap relative to norms historical
Tesla shares are trading at a forward price-to-earnings multiple of 32 times, according to data from Yahoo Finance. This represents a discount of almost 70% from its historical average multiple. And from an EV/EBITDA multiple perspective, Tesla stock is trading at a 53% discount to its historical average.
Shares trade at steep discounts from forward enterprise value to EBIT [earnings before interest and taxes] and business value from sales points of view, too.
Those valuation metrics only compressed further on Tuesday amid another 4% drop in Tesla stock, making Tesla the most visited ticker page on Yahoo Finance.
Shares are down about 54% year to date.
Analysts like Ives point to a few factors that drove the slide in Tesla stock that wiped more than $260 billion off its market cap this year.
First, the risk of operational errors at Tesla has grown as Elon Musk works around the clock to fix his new Twitter portfolio.
“Musk has gone from a superhero in Tesla stock to a villain in the eyes of the street as hype grows with every tweet,” Ives said.
Second, concerns about manufacturing issues and Tesla’s sales pace in China remain amid an uncertain approach to COVID-19 policies.
And finally, competition in the electric vehicle space in the U.S. has only intensified this year, increasing the risk of slowing Tesla’s growth in 2023 and beyond.
Brian Sozzi is general editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi yen LinkedIn.
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