Piper Jaffray Analyst Alexander Potter hiked his price target for Tesla (TSLA) to $386 from $368 after the company reported a narrower-than-expected loss for the second quarter Wednesday.

Potter's new price target implies an 18.4% upside for the stock, which has increased its price by over 50% since the start of the year. Potter reiterated his "overweight" rating for Tesla.

Potter said the company's operating metrics are improving, suggesting the company's stock will continue its upward trend even as Tesla faces the enormous challenge of perfecting its Model 3 production ramp.

It isn't smart to "bet against a story with this much momentum," Potter said.

Tesla stock is trading up over 5% premarket.

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