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Curious if Tesla’s high-flying stock is still worth the hype? You are definitely not alone in asking whether now is the right time to buy, hold, or wait it out.
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Tesla’s share price has delivered a 2.6% gain in the last week and is still up an impressive 13.4% for the year. In addition, the stock has provided a substantial 139.2% return over three years, presenting plenty of action for growth watchers and cautious investors alike.
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Recent headlines continue to spotlight Tesla’s evolving leadership in electric vehicles and ambitious tech projects, capturing both excitement and skepticism on Wall Street. From new partnerships to shake-ups in the auto industry, these updates keep the market guessing about what’s next for the company and its valuation.
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Currently, Tesla scores 0 out of 6 on our core undervaluation checks, so it is time to unpack what that means and look beyond the usual valuation playbook for an even sharper perspective later in this article.
Tesla scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Discounted Cash Flow (DCF) model estimates what Tesla should be worth today by projecting its future cash flows and then discounting those back to present value. This approach gives investors a look at what the company might generate over time, beyond the day-to-day ups and downs of the market.
Right now, Tesla’s Free Cash Flow (FCF) stands at about $6.4 Billion. Analyst forecasts extend to 2029, at which point the company is expected to generate over $20.9 Billion in annual FCF. The next decade’s outlook for Tesla’s cash generation, based on projections, shows a pattern of accelerating growth, particularly as numbers for 2030 and beyond are extrapolated using industry trends and the company’s current momentum.
Despite these growth expectations, the DCF model calculates an intrinsic value of $138.81 per share for Tesla. With the current share price significantly higher, this suggests the stock is trading at a hefty premium. The implied discount is -209.9%, meaning the market price is over three times what this cash flow model considers fair value.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Tesla may be overvalued by 209.9%. Discover 930 undervalued stocks or create your own screener to find better value opportunities.
The Price-to-Sales (P/S) ratio is a widely used metric for valuing profitable companies like Tesla, as it measures a stock’s price relative to its revenue. Because it is less impacted by accounting choices and one-time gains, P/S can be particularly informative for high-growth, innovative firms whose net profits may fluctuate as they invest heavily for future expansion.
“Fair” valuation using the P/S ratio depends on growth expectations and risk. Fast-growing, dominant industry players often trade at higher multiples due to the potential for much larger future revenues. In contrast, companies facing more risk or slower expansion tend to command lower ratios.
Tesla currently trades on a P/S ratio of 14.96x. That stands well above both the average for auto industry peers (1.37x) and the broader industry average of 1.06x. However, instead of simply matching Tesla to its peers, Simply Wall St calculates a bespoke “Fair Ratio” of 2.86x for Tesla, reflecting its unique blend of growth prospects, profit margins, industry, and market cap.
The Fair Ratio offers a sharper comparison than industry or peer averages, as it incorporates Tesla’s specific growth, risk, profitability, and size. Using this lens, Tesla’s current P/S is far higher than what is justified by its fundamentals and risk profile.
Result: OVERVALUED
PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1444 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple but powerful tool that helps you look beyond just numbers by letting you connect your own story or perspective about Tesla with real financial forecasts.
A Narrative is your personal investment thesis: it combines your beliefs and expectations about Tesla’s future (such as where its revenue, profit margins, and market position are headed) with your own estimates of fair value, allowing you to frame investments in the context of real-world events and data.
What makes Narratives different is that they do not just describe “what ifs.” They quantify them by automatically linking each story to updated forecasts, valuation models, and a calculated fair value that you can compare directly to Tesla’s current price.
This flexible approach is available right within the Simply Wall St Community, where millions of investors shape, share, and update their Narratives as news and financials evolve. This helps keep your insights fresh and actionable.
Different investors often see the same company in dramatically different ways. One Narrative might argue that Tesla is just a challenging car company with a fair value of $67.45, while another sees it as a tech juggernaut with untapped robotics potential and a fair value over $2,700. Which story fits your beliefs?
By creating and following Narratives, you empower yourself to make smarter, more transparent buy or sell decisions as the Tesla story unfolds.
For Tesla, we will make it really easy for you with previews of two leading Tesla Narratives:
🐂 Tesla Bull Case
Fair Value: $2,707.91
Current price is undervalued by approximately 84.1% compared to this narrative’s fair value.
Revenue Growth Rate: 77%
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Projects Tesla evolving into a massive multi-sector tech leader, estimating $1.94 trillion in revenue and $534 billion profit by 2030.
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Fair value for the stock today ranges from $2,120 (bear) to $4,240 (bull), emphasizing aggressive growth in AI, robotics, energy, and software.
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Sees current price as drastically below future value if Tesla executes on AI, autonomous driving, and energy at scale, though acknowledges significant risks remain.
🐻 Tesla Bear Case
Fair Value: $332.71
Current price is overvalued by approximately 29.4% compared to this narrative’s fair value.
Revenue Growth Rate: 30%
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Highlights that Tesla faces major opportunities in new products, expansion, and technology, but also faces intensifying competition and operational risks.
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Assumes revenue in 2029 could reach $150 billion with profit margins in the 20-22% range, but warns of regulatory, supply chain, and economic risks.
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Values Tesla with more conservative growth and earnings assumptions, expecting valuation multiples to moderate as competition increases and market matures.
Do you think there’s more to the story for Tesla? Head over to our Community to see what others are saying!
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.
Companies discussed in this article include TSLA.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com