At What Price Would Tesla Stock Be Worth Buying?

With electric car maker Tesla (TSLA -5.06%) going from growing its vehicle deliveries at rates of around 50% annually as recently as 2022, to about flat sales growth in 2024 and declining sales to start the year in 2025, many investors are likely still trying to figure out how to value the automaker. Making it more difficult, Tesla management says the company is in between two major growth waves, yet there's no clear catalyst guaranteeing strong growth anytime soon.

In an effort to value Tesla shares and see if the growth stock is worth buying today, let's consider some of the information we have about the company. I'll carefully try to piece together a picture of the company's prospects relative to the stock's current valuation.

Spoiler alert: I don't think shares are a buy at their current price. But there is a price I would consider buying into this growth story. Read on to see what that price is.

Bull case vs. bear case

The bull case for Tesla boils down to what's in the pipeline. Reading through a transcript of the automaker's most recent earnings call is a great place to start to understand just how optimistic the company's aspirations for future growth are.

"I see a path of Tesla being the most valuable company in the world by far," said Tesla CEO Elon Musk in the company's fourth-quarter earnings call in late January. To be fair, he also emphasized that it wouldn't be "an easy path." Still, this is quite the statement considering that Tesla's market capitalization currently stands at not far above $800 billion. This is a far cry from some of the biggest companies in the U.S., with market caps around $3 trillion.

How does Tesla get to the top? With the help of the company's expertise in manufacturing, artificial intelligence, and robotics, according to Musk. Specifically, the CEO believes that yet-to-be launched lower-cost vehicles, the planned rollout of an autonomous taxi service this summer, future sales of humanoid robots, and continued rapid growth of the company's energy storage business will play key roles in Tesla's future growth.

But all of this starkly contrasts with the company's current business trajectory. Not only did Tesla's first-quarter deliveries fall 13% year over year and 32% sequentially, but production was about 7% higher than deliveries. While we can't know for sure whether Tesla's supply and demand are appropriately balanced, these numbers certainly don't look promising.

But even though Tesla's recent results may appear disastrous on the surface, investors should consider a few things. A higher interest rate environment has been a burden on auto sales overall; as lower sales volumes in this more difficult consumer environment fade into the rearview mirror, Tesla will have easier comparisons, and sales growth could improve. Further, investors should note that one reason for softer sales during the first quarter of 2025 was Tesla's decision to update its factories during the period -- a move that management said would ultimately lead to several weeks of lost production.

Is Tesla stock a buy?

While it's tempting to jump on board with the Tesla bulls in hopeful excitement about the company's future, a better approach is probably one that balances skepticism and optimism. Trading at about 124 times earnings as of this writing, the market seems dead-set on a spectacularly positive outcome for the company in the coming years. A valuation like this prices in more than robust growth, it prices in outstanding growth. At Tesla stock's current valuation, the market is anticipating a return to sustained double-digit sales growth and significant profit margin expansion in the years ahead.

I'm OK with betting on a turnaround and a return to robust growth rates. I think Tesla has proven itself enough for investors to get on board with this idea. But pricing in an extraordinary future that transcends anything ever done in the automotive industry, as well as the promise of Tesla stretching into substantial high-margin revenue streams in the tech sector, is something that should be viewed with at least some skepticism.

So, would I buy Tesla shares today? No. But if they fell to around $200 -- about a 25% drop -- I might change my mind. At $200, I'd still be taking a leap of faith. But that leap would leave some room for a scenario in which not all of the company's plans go according to plan.