Tesla shares are trading at their “cheapest valuation” in years, says Wedbush’s Dan Ives

The sharp fall in Tesla’s (TSLA) stock price this year has begun 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] it is 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’s stock being noticeably cheap compared to historical standards.

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

Stocks trade at significant discounts from forward enterprise value to EBIT [earnings before interest and taxes] and enterprise value also to sales points of view.

These valuation metrics were only further compressed on Tuesday amid another 4% drop in Tesla’s stock, which led to Tesla having the most visited ticker page on Yahoo Finance.

Year-to-date, shares are down about 54%.

Analysts like Ives point to a number of factors driving Tesla’s share price decline, which wiped out more than $260 billion in market cap this year.

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

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

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

“Musk has gone from superhero to Tesla’s stock to villain in the eyes of the street as the overhang grows with every tweet,” Ives said.

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

And finally, electric vehicle competition in the United States has only intensified this year, raising the risk of a growth slowdown for Tesla in 2023 and beyond.

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

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