Evaluating Aurora Innovation After Recent 11.5% Drop and Long-Term Potential in 2025

If you’re trying to decide whether Aurora Innovation’s stock deserves a spot in your portfolio, you’re in good company. After all, it’s not every day a company involved in autonomous vehicle technology sees its stock price rollercoaster the way Aurora has. Over the past three years, the stock is up a striking 146.4%, a testament to the excitement (and volatility) surrounding the industry. But in the shorter term, things have cooled off, with a 0.6% rise over the last week mostly offsetting the steeper 11.5% drop over the past month and a year-to-date slide of 15.6%. Clearly, investors are still figuring out what Aurora’s true value might be.

So, what’s been moving the needle? Much of the recent conversation has focused on Aurora’s progress toward safe, driverless trucks, fueled by steady partnerships and pilot programs with established logistics players. The buzz hasn’t always translated into sustained momentum, though. For every leap forward, there are reminders of just how complex and competitive this space remains. Yet, what keeps Aurora in the discussion is not simply hope, but a valuation that some argue offers real potential. According to our assessment, Aurora currently scores a 3 out of 6 on core valuation checks, signaling that it’s undervalued in half the key areas we examine.

Of course, not all valuation models look at companies like Aurora in the same way. Up next, I’ll break down the methods behind these scores. And if you’ve ever wondered whether there’s an approach that goes beyond the usual numbers, you’ll want to stick around for the final section.

Why Aurora Innovation is lagging behind its peers

Approach 1: Aurora Innovation Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future free cash flows and discounting them to today’s dollars. Essentially, it answers the question: if Aurora Innovation could generate cash at projected future rates, what would all of those future dollars be worth now?

Looking at the numbers, Aurora posted a last twelve months free cash flow of approximately -$583 million. Analyst consensus forecasts a continued burn for the first few years, but a meaningful turnaround is anticipated by 2029, with free cash flow projected to hit $368.8 million. Over the following five years, Simply Wall St extrapolates even stronger performance, with estimates reaching $1.53 billion in 2035. It is important to note that these longer-term projections become less certain further out, but they help shape a more complete picture of Aurora’s long-term potential.

Based on this DCF analysis, Aurora Innovation’s intrinsic value is calculated at $8.30 per share. Given the current share price, this implies a discount of 38.0 percent, suggesting the stock is considerably undervalued on a cash flow basis.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Aurora Innovation is undervalued by 38.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Aurora Innovation Price vs Book (P/B)

The Price-to-Book (P/B) ratio is commonly used to value technology and innovation-driven companies like Aurora, especially when traditional earnings-based metrics are less relevant due to limited or negative profits. P/B tells investors how much they are paying for each dollar of net assets on the balance sheet. This makes it a useful tool for assessing companies at an earlier growth stage or in asset-heavy sectors.

A “normal” or “fair” P/B ratio varies depending on how quickly a company is expected to grow and the risks it faces. High growth expectations or strong intellectual property can warrant higher P/B ratios. In contrast, elevated risks or uncertain outlooks should command a lower multiple. For context, Aurora currently trades at a P/B ratio of 4.77x. This sits above the broader Software industry average of 3.97x but below the peer group average of 8.79x.

To move beyond simple industry or peer comparisons, Simply Wall St uses a proprietary “Fair Ratio.” This metric weighs multiple factors such as expected growth, risk, profit margins, industry positioning, and market cap to arrive at what a balanced P/B should look like for Aurora specifically. Because it is tailored to the company’s real prospects and profile, the Fair Ratio offers a more nuanced and actionable reference point than an industry or peer average alone.

At present, the actual P/B ratio and the Fair Ratio are very closely matched for Aurora. This suggests the market is valuing the company about right based on its underlying book value and the risks and opportunities it faces.

Result: ABOUT RIGHT

PB 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 Aurora Innovation Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a user's unique perspective on a company; it is the story you believe about Aurora Innovation, paired with your forecasts of its future revenue, profits, and what you think is a fair price. Narratives connect the dots between a company’s story, the financial forecasts you believe in, and the valuation that matters to you.

On Simply Wall St’s platform, Narratives are an easy, accessible tool available right within the Community page, used by millions of investors. They help you confidently decide when to buy or sell by showing how your Fair Value estimate stacks up against Aurora’s current price. Importantly, Narratives update automatically any time fresh information, like earnings news, is released. This keeps your projections relevant. For example, on Aurora Innovation, some investors forecast rapid adoption and see high potential, while others are more cautious, resulting in a wide range of Fair Values. This flexible, dynamic approach makes Narratives a powerful way to tailor investment decisions to your own beliefs and the latest data.

Do you think there's more to the story for Aurora Innovation? 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