2026 has been a rough year for Tesla (NASDAQ:TSLA) stock so far. Having peaked at just shy of $490 per share in mid-December 2025, the electric vehicle (EV) automaker’s shares have reversed their trajectory. And since the start of January, shareholders have suffered a roughly 22% loss.
But has this secretly created an amazing buying opportunity for my portfolio?
What’s going on with Tesla?
Tesla’s currently being hit by multiple converging headwinds. Rising competition from rival EV manufactures, most notably BYD, is putting pressure on the firm’s pricing power and market share, most notably in China and Europe.
At the same time, CEO Elon Musk’s politically polarising involvement with the Trump administration has also resulted in brand damage and alienation of part of its ESG-oriented customer base – the impact of which has only been compounded by the loss of tax incentives in the US.
The result? First-quarter deliveries for 2026 missed analyst targets, falling close to 14% versus the last quarter of 2025, with 50,000 vehicles being added to unsold inventory. As such, a growing number of institutional investors have been heading for the exits. And yet, there are some notable exceptions.
American investor Cathie Wood is a notorious Tesla bull and has been using the recent share price weakness as an opportunity to buy even more shares. So what does she see that others don’t? And should I follow in her footsteps?
A hidden 7x growth opportunity
The bull case for Tesla among institutional bulls like Wood rests on a fundamental reframing of the business. Tesla isn’t just a carmaker – it’s a robotics and AI company.
Autonomous robotaxis and humanoid robots are expected to enter commercial production later this year. And Tesla’s positioning itself at the forefront of two brand new industries. And as the group’s historical track record shows, Tesla knows how to make the most of a first-mover advantage.
Combined, these markets present a new multi-trillion-dollar long-term opportunity for the business. And it’s why Wood’s placed a whopping $2,600 share price target by 2029 on Tesla stock. If she’s right, that’s a potential 657% return over the next three years – enough to turn £5,000 into a whopping £37,873!
Risk versus reward
This explosive potential comes with a huge caveat. Tesla’s discontinuing production of both its Model S and Model X EV models as of the second quarter of 2026. That will make room for the production of its Optimus robots. As such, Tesla’s effectively abandoning a premium spot in the EV market in favour of its new ventures.
Needless to say, voluntarily giving up market share in favour of a brand new, still-unproven technology is a big gamble that could backfire spectacularly if Optimus fails to live up to expectations. With that in mind, it isn’t surprising to see most institutional investors retreat.
There’s no denying the firm’s explosive potential. But even after the recent sell-off, the share price still trades at a premium valuation. This suggests some of this expected growth is already priced in. And that opens the door to even more volatility if the company fails to deliver.
That’s why, personally, I’m staying on the sidelines for now. But for those with a high risk tolerance and high conviction in Musk’s leadership and strategy, taking a nibble might be worth considering.
