Is There Still Room for Tesla Shares After a 61% Yearly Surge in 2025?

If you’re standing on the edge, wondering whether it’s the right moment to jump into Tesla stock or take some profits, you’re not alone. Tesla’s shares have kept investors guessing lately, weaving back and forth with a 1.3% drop this past week but growing 2.4% over the last month. The story gets even more interesting when you widen the lens: up 14.4% since January and an eye-catching 61.1% over the last year. Looking back five years, Tesla’s up an astonishing 235.3%. That kind of performance has turned more than a few skeptics into believers. Yet, the question persists: Is there still room to run, or has the price already factored in all the big wins ahead?

There’s more happening than just price swings. Recent headlines around Tesla’s aggressive push into new markets, expanded production capabilities, and bold moves in AI and energy storage have raised eyebrows, but they’ve also fueled ongoing debate about what the stock is truly worth. Of course, wild surges and sharp dips often reflect changing perceptions of risk and growth, rather than just today’s headlines. However, when we run Tesla’s current numbers through a variety of classic valuation tests, those tried and true measures analysts lean on, the company earns a value score of 0 out of 6. In other words, Tesla isn’t undervalued in any of the six major checks right now.

But what do those valuation approaches actually tell us, and is there more to the story? Let’s break down how these methods work. Stay tuned, because at the end, I’ll share an even more meaningful way to look at Tesla’s value that most folks overlook.

Tesla scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Tesla Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates the intrinsic value of a company by projecting its future cash flows and discounting them back to today’s value. This method is widely used because it focuses on the company’s ability to generate cash over time, which ultimately determines its real worth to shareholders.

Tesla’s current Free Cash Flow stands at about $6.40 Billion. Based on analysts’ estimates and continued growth, this figure is projected to rise dramatically over the coming decade, with forecasts reaching $23.28 Billion in cash flow by 2029. The first five years of these projections use detailed analyst estimates. Numbers beyond that point are extrapolated by Simply Wall St using historic trends and industry expectations.

By discounting these projected cash flows back to their present value, the DCF model arrives at an intrinsic value for Tesla of $139.06 per share. This is significantly below where Tesla currently trades, implying that the company’s stock is 211.9% overvalued relative to this estimate.

If you rely on DCF as your yardstick, Tesla appears richly valued at today’s levels, with future growth already more than priced in.

Result: OVERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Tesla may be overvalued by 211.9%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Tesla Price vs Sales (P/S) Ratio

The Price-to-Sales (P/S) ratio is a useful way to value a profitable and rapidly growing company like Tesla, especially when fast revenue growth may make traditional earnings metrics less meaningful. For businesses reinvesting heavily for the future, sales can reflect the underlying strength and scaling potential better than just reported profits.

Investors often look for a “fair” P/S ratio that matches a company’s expected growth and risk profile. Higher expected revenue growth or stronger competitive advantages can justify a higher multiple, while increased risks or slowing growth usually call for a lower P/S.

Currently, Tesla trades at a P/S ratio of 15.08x. This is dramatically higher than the auto industry average of 1.34x and the average for its peers at 1.21x. At first glance, this would suggest Tesla is priced for perfection and then some, far outpacing typical valuations in the sector.

This is where the Simply Wall St “Fair Ratio” comes in. The Fair Ratio, 3.66x in Tesla’s case, is a custom benchmark that is designed to reflect the company’s unique blend of future growth, profit margins, industry dynamics, market cap, and risk. Unlike a simple industry or peer average, the Fair Ratio aims to capture the nuances that make Tesla different from other automakers.

Comparing Tesla’s current P/S (15.08x) with its Fair Ratio (3.66x) shows the market is valuing Tesla far above what this holistic measure would suggest. Based on this approach, Tesla shares appear significantly overvalued at current levels.

Result: OVERVALUED

PS 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 Tesla Narrative

Earlier, we mentioned that there’s an even better way to understand a company’s value. Let’s introduce you to Narratives. A Narrative is more than just a number; it’s the story you believe about Tesla’s future, brought to life with structured financial expectations around revenue, margins, and fair value.

On Simply Wall St’s Community page, Narratives allow investors to create and share their own perspective on a company, connecting the big trends and future catalysts they see with a full financial forecast. This approach allows you to not only see the numbers behind the story, but also compare your own “fair value” estimate for Tesla with the current market price.

What makes Narratives especially powerful is that they update dynamically when fresh news or earnings data arrives, so you always have the latest view. This transparency and flexibility make it easier to decide whether to buy, hold, or sell, based on what you believe is most likely to drive Tesla’s future success.

For example, some investors think Tesla’s fair value is as low as $67 per share, weighting risks in self-driving and competition. Others, bullish on AI and robotics, set fair values above $2,700 per share, which is a reminder that the “right” price depends on your unique Narrative.

For Tesla, however, we'll make it really easy for you with previews of two leading Tesla Narratives:

🐂 Tesla Bull Case

Fair Value: $2,707.91

Currently 84% below this fair value

Revenue Growth Rate: 77%

• Projects Tesla’s 2030 revenue at nearly $2 trillion across AI, robotics, energy, and automotive segments, with net profits exceeding $500 billion.
• Fair value calculations imply Tesla shares could be worth more than $2,000 today. This suggests it is dramatically undervalued if it executes on its ambitious roadmap.
• Emphasizes the massive upside potential if Tesla succeeds and acknowledges key risks from competition, execution, and regulation.

🐻 Tesla Bear Case

Fair Value: $177.19

Currently 145% above this fair value

Revenue Growth Rate: 14.36%

• Forecasts solid growth in core auto and energy segments, but believes vehicle and market share gains will be limited by industry saturation and infrastructure constraints.
• Excludes large speculative contributions from robotaxis and humanoid robots and predicts Tesla’s profit margins and price-earnings multiple will eventually converge toward other automakers.
• Determines the current share price more than reflects future growth, and states that the market is pricing in overly aggressive assumptions for long-term upside.

Do you think there's more to the story for Tesla? 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com