Tesla (TSLA) just signed a new long term power purchase agreement with Zelestra for the 140 MWac Lumen Farm solar project in northeast Texas, adding to its growing renewable energy commitments across key markets.

Tesla shares have come under pressure recently, with the 7 day share price return down 17.8% and the 30 day share price return down 25.35%, even though the 5 year total shareholder return is 29.74%.

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Tesla keeps signing sizeable renewable power deals at the same time the stock has shed close to a third of its value this year. The business story is one thing. Whether Tesla at about US$307 a share now lines up with that story is the next question.

Most Popular Narrative: 53.8% Undervalued

According to the most followed Tesla narrative, a fair value of about $665 sits well above the last close at $307.44. That gap rests on a very different vision of what drives Tesla’s future revenue and earnings power.

The valuation paradigm has shifted from hardware sales to ecosystem dominance. Just as the iPhone created the App Store economy, Optimus is poised to create the "Labor Economy."

Want to see how a robot driven "Labor Economy" can justify more than doubling Tesla’s current share price? The narrative leans on rapid service led revenue growth, expanding margins and a premium future earnings multiple usually reserved for mature platform companies. Curious which specific growth paths and profitability targets sit underneath that bold fair value? The full narrative breaks down each assumption in detail.

Result: Fair Value of $665 (UNDERVALUED)

However, Tesla’s Labor Economy pitch still faces real execution risk if robot or robotaxi rollouts slip, or if regulators slow commercial deployment timelines.

Another View: Tesla On Traditional Valuation Metrics

That $665 fair value narrative sits against a very different signal from simple market ratios. Tesla currently trades on a P/S of 11.7x. The broader US Auto industry sits around 0.6x and similar peers are near 1.5x, while the fair ratio is 3.2x.

This gap suggests the market is already paying a sizeable premium for Tesla compared with both its industry and that fair ratio the price could move toward over time. The key question is whether you see current AI and robotics ambitions as enough to keep that premium in place.

Next Steps

With such split views on Tesla, it makes sense to check the underlying data yourself and move quickly to shape your own stance. A useful place to start is by weighing the 1 key reward and 2 important warning signs.

Looking for more investment ideas beyond Tesla?

If Tesla has you thinking more broadly about your portfolio, this is the moment to scan for other stocks that match your goals before opportunities move on.

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• Cut through noise and concentrate on resilience using the 83 resilient stocks with low risk scores if you want stocks with lower risk scores on your radar.

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.