How Recent Stock Selloff Impacts BYD’s Valuation in 2025

If you’ve been eyeing BYD stock and wondering whether now’s the time to dive in or sit it out, you’re not alone. Investors everywhere have been watching as BYD’s market journey twists and turns, punctuated by headline-grabbing news and dramatic price swings. In just the last year, BYD’s stock has soared an impressive 17.1%, with a year-to-date return of 23.7%. Even more striking is the long-term story: BYD’s share price has risen nearly 172% over five years, reflecting a remarkable stretch of innovation-fueled growth.

Yet, the past month has tested the nerves of even the most seasoned holders. Shares slipped 4.9% over the last 30 days and tumbled 6.2% in just the past week, as the company found itself under pressure to reassure investors. A $45 billion selloff and new tariffs looming in Mexico have contributed to a volatile backdrop. At the same time, BYD has scored jaw-dropping wins, including tripling its European sales in August and outpacing Tesla in critical markets. This provides evidence that its growth engine is still roaring.

Through all this, the question remains: at the current price of 106.5, is BYD truly undervalued? Taking a closer look at our six-point valuation framework, BYD passes three of the checks, giving it a value score of 3 out of 6. That balanced score signals there’s more to the story than meets the eye.

Let’s walk through the major valuation methods investors are using to size up BYD, and see what they reveal. Then, stick around for an even more insightful way to understand the company’s real value.

Why BYD is lagging behind its peers

Approach 1: BYD Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a company’s shares are really worth by projecting its future cash flows and then discounting those cash flows back to today’s value. This approach provides a data-driven, forward-looking estimate of the stock’s intrinsic value, focusing on the company’s ability to generate cash in the years ahead.

For BYD, analysts estimate that last year’s Free Cash Flow (FCF) was negative at about CN¥124.3 Million. However, forecasts show a dramatic turnaround; projections indicate BYD’s annual FCF could reach roughly CN¥149.4 Billion by 2035, with significant milestones along the way, such as CN¥79.4 Billion by 2027. These projections highlight anticipated strong cash flow growth. The DCF analysis uses these inputs to calculate the present value of all future cash flows, capturing the value today of earnings many years into the future.

Based on these figures, the DCF model pegs BYD’s intrinsic value at CN¥145.03 per share, compared to the recent price of CN¥106.5. This suggests the stock is trading at a 26.6% discount to its fair value, which is considered one of the most substantial mispricings among global automakers at the moment.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for BYD.

Our Discounted Cash Flow (DCF) analysis suggests BYD is undervalued by 26.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: BYD Price vs Earnings

The Price-to-Earnings (PE) ratio is often the go-to metric for evaluating profitable companies, because it shows how much investors are willing to pay for each dollar of earnings. When a company is consistently generating profits, the PE multiple offers a straightforward snapshot of whether its stock price makes sense relative to its underlying earnings power.

What counts as a “normal” or “fair” PE depends on expectations for growth, the company’s track record, and the risks it faces. Higher-growth companies typically command higher PE ratios, while more mature or riskier companies tend to trade at lower multiples. For BYD, the current PE ratio stands at 21.2x, which is above the auto industry average of 18.0x and the peer average of 18.2x.

Simply Wall St’s proprietary “Fair Ratio” goes a step beyond generic comparisons by estimating the multiple an investor should pay based on BYD’s specific growth prospects, profit margins, risk profile, industry dynamics, and market cap. For BYD, the Fair Ratio is 16.4x, which reflects a nuanced assessment of what the stock should be priced at today based on its unique characteristics. This approach is more insightful than a straight industry or peer average because it customizes the benchmark for BYD’s actual business outlook.

Comparing BYD’s current PE of 21.2x with its Fair Ratio of 16.4x, the stock appears to be somewhat richly valued based on earnings multiples.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your BYD Narrative

Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your own perspective on a company’s future, a story rooted in your assumptions about fair value, future revenue, earnings, and profit margins. Narratives connect the facts of BYD’s journey with your expectations, linking the company’s story to a clear financial forecast and then to a fair value you can actually use for decisions.

With Narratives, you do not need to be a Wall Street analyst; they are an easy, accessible tool available in Simply Wall St’s Community page, where millions of investors outline their views. Narratives help you decide when to buy or sell by comparing your personalized Fair Value to the current Price, adapting automatically as new news or earnings emerge. For example, some investors see BYD’s fair value at over CN¥160 per share based on ambitious global expansion, while others are more cautious, calculating a value closer to CN¥80 due to competitive pressures. Narratives put the power of professional-style analysis into your hands, with no spreadsheet required.

Do you think there's more to the story for BYD? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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