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Tesla stock is trading at ‘cheapest valuation’ in years, says Wedbush’s Dan Ives


Slope in Tesla’s (TSLA) stock price This year is starting to catch the eye of valuation watchers.

“Not since 2018, Tesla has been trading at these levels,” Wedbush analyst Dan Ives wrote in an email to Yahoo Finance. “Above EV/EBITDA [earnings before interest, taxes, depreciation, and amortization] That base is the cheapest valuation to date.”

Ives — a former Tesla bull who made headlines in mid-November for EV maker stock removed from Wedbush best ideas list — it’s not too far off that Tesla’s stock is remarkably cheap by historical standards.

Tesla stock trades at a price-to-forward earnings ratio of 32 times, according to data from Yahoo Finance. That’s almost a 70% discount from its historical average multiple. And from an EV/EBITDA perspective, Tesla stock is trading at a 53% discount to its historical average.

Stocks that trade at a high discount from futures business value to EBIT [earnings before interest and taxes] and business value from a selling point of view.

These valuation metrics were only compressed further on Tuesday amid a further 4% drop in Tesla shares, resulting in Tesla having a most visited bookmarks on Yahoo Finance.

Year-to-date, the stock is down about 54%.

Analysts like Ives have pointed to a number of factors that have caused Tesla stock to plunge, causing the company’s market capitalization to lose more than $260 billion this year.

YANTAI, CHINA - October 29, 2022 - Customers learn about Tesla Model Y at a shopping mall in Yantai, Shandong province, China, October 29, 2022. On October 24, 2022 2022, Tesla China announced that it will reduce the price of domestic models.  Model 3 and Model Y, two popular models.  (Photo credit should read CFOTO/Future Publishing via Getty Images)

Customers learn about a Tesla Model Y at a shopping mall in Yantai, Shandong province, China, October 29, 2022. (CFOTO/Future Publishing via Getty Images)

First, the risk of operational errors at Tesla increased as Elon Musk worked around the clock to fix his problems. latest portfolio company Twitter.

“Musk has gone from a superhero to Tesla stock to a villain in the eyes of the Street as the overhang increases with each tweet,” Ives said.

Second, concerns remain around Tesla’s production issues and sales pace in China amid an uncertain approach to COVID-19 policies.

And finally, competition in the U.S. electric vehicle sector is only getting tougher this year — raising the risk of slowing Tesla’s growth in 2023 and beyond.

Brian Sozzi is an editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and more LinkedIn.

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