Piper Jaffray Thinks Die-Hard Investors Will Protect Tesla From Too Much Downside

Shares of Tesla Motors Inc TSLA lost almost 11 percent on Wednesday following the company’s bid to buy SolarCity Corp SCTY. Of course, this was all Tesla analysts could talk about on Wednesday.

Among the numerous firms that weighed in on the potential deal was Piper Jaffray, which argued the transaction makes plenty of strategic sense - although it might be too much to ask from Tesla right now.

“By attempting to produce a full suite of consumer products that produce, store, and consume energy, TSLA is demonstrating once again how ambitious its long-term strategy really is,” a note from analysts Alexander E. Potter and Winnie Dong read.

“Big-thinking investors will probably like this approach,” the report continued, as it provides further arguments to state Tesla’s market cap could eventually outpace that of other, less innovative automotive companies, which don’t adventure into other industries.

However, the analysts noted, the Tesla Model 3 is already making the company subject itself to “one of the most ambitious (and probably one of the least achievable) production ramps in automotive history” and integrating SolarCity would not contribute to making the process any easier.

Consequently, Piper Jaffray decided to remain on the sidelines on Tesla's stock, which they rate a Neutral with a $223 price target.