“Not since 2018 has Tesla traded at these levels,” 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 on Tesla’s stock being noticeably cheap relative to historical norms.
Tesla’s stock trades on a forward price-to-earnings multiple of 32 times, according to Yahoo Finance data. That’s an almost 70% discount from its historical average multiple. And from a forward EV/EBITDA multiple perspective, Tesla stock is trading at a 53% discount from its historical average.
Shares trade at steep discounts from forward enterprise value to EBIT [earnings before interest and taxes] and enterprise value to sales standpoints, too.
These valuation metrics only compressed further on Tuesday amid another 4% slide in Tesla’s stock, which led to Tesla having the most-visited ticker page on Yahoo Finance.
Year to date, shares have nosedived about 54%.
Analysts such as Ives point to a few factors driving the Tesla stock plunge that wiped out more than $260 billion in market cap this year.
First, the risk of operational miscues at Tesla has grown as Elon Musk works around the clock to fix his newest portfolio company Twitter.
“Musk has gone from a superhero to Tesla’s stock to a villain in the eyes of the Street as the overhang grows with each tweet,” Ives said.
Second, concerns remain around manufacturing issues and the pace of sales for Tesla in China amid an uncertain approach to COVID-19 policies.
And lastly, competition in the EV space in the United States has only intensified this year — raising the risk of slowing growth for Tesla in 2023 and beyond.