Tesla's value underrated by Musk, top investor says

Tesla Motors Inc Chief Executive Elon Musk pauses during a news conference in Tokyo Japan

Board members at Tesla are evaluating CEO and Chairman Elon Musk's $72 billion proposal to take the electric auto and solar panel maker private.

The SEC declined to comment on the reports. These analysts have an average price target on the stock of $321.89, which implies almost 14% downside from current levels.

The Times article went on to mention that, if Musk has not in fact fully secured the funding, the assertion of which sent shares up, it would amount to securities fraud. Tesla's stock backtracked by more than 2 per cent to close at US$370.34. The stock is far below the $420 price at which Musk said shareholders would be bought out.

Musk's tweet was the extra fuel that spiked Tesla's shares within reach of their all-time high.

The statement, issued by six of Tesla's nine-member board, suggests Musk's controversial tweets, which led to the company's stock being suspended from trading for a time on Tuesday, were less spontaneous than originally believed and not designed simply to punish Tesla stock short-sellers. In short, Musk believes going private can place the focus back on long-term planning, which is now viewed through the lens of how it will affect short-term quarterly finances.

Many other companies would halt trading of their stock before disclosing news of such importance to their shareholders, and the announcement would be made in a regulatory filing.

'Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term, ' Musk wrote in a letter to employees.

The leveraged buyback would be one of the largest in history, with Tesla's estimated worth around $70 to $80 billion.

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Musk has promised a sustained net profit starting in the third quarter.

Some on Wall Street shared that view.

"It's very clear that he doesn't like to deal with being a CEO of a public company, " said Gene Munster, a former stock market analyst who is now managing partner of investment fund Loup Ventures.

SoftBank is now not interested in a deal for Tesla after earlier this year taking a stake in General Motors Co's self-driving unit, Cruise, Reuters reported earlier on Wednesday.

Musk also said he intends to give Tesla's existing shareholders the option of retaining a stake in the company through a special fund if they want to stay invested. Alternatively, stockholders can hold on to their shares, which would become privately-traded.

The board members said they were "taking the appropriate next steps" to evaluate the proposal.

Tesla is now valued at $63.8 billion.

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