Two factors are the main reasons that are putting Tesla on the ropes, China, and brand cannibalization. The issues with the demand that have been pulling the stock price down are not the real culprit according to a Piper Jaffray Analyst.

Tesla Stock is down 16% in the last 30 days, selling today at $207.37. But Alexander Potter, the analyst from Pipper, is reiterating his Overweight rating on TSLA. His price target for the stock is $396, almost double of the value today.

“We understand why some investors consider the stock un-investable, but of all the reasons to doubt our Overweight thesis, we think weak demand is among the least convincing.” Says Potter.

The analyst thinks that the Model 3 is very appealing to some buyers that previous were looking for less expensive cars, but because of some of the features of the vehicle are willing to spend a little extra. If that’s true, the market is more significant than we previously thought.

“Tesla’s brand appeals to nonluxury buyers,” he wrote. “Our analysis suggests that about 54% of Model 3 demand should come from consumers who otherwise would have chosen mass-market vehicles.”

Piper Jaffray forecasts 289,000 global 2019 Model 3 deliveries, very close to FactSet’s consensus, roughly 290,000.

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