A major Tesla investor is urging Elon Musk not to take the company private because it could be worth $4,000 a share (TSLA)

ARK Investment Management — which owns 315,377 shares of Tesla, worth roughly $101 million — has published an open letter to CEO Elon Musk urging him to not take the electric-car maker private, arguing the stock could be worth nearly ten times the billionaire's $420 target.

"Tesla should be valued somewhere between $700 and $4,000 per share  in five years," Cathie Wood, the firm's founder and chief executive, said.

"Taking Tesla private today at $420 per share would undervalue it greatly, depriving many investors of the opportunity to participate in its success. In our view, given the right investment time horizon, TSLA is a deep value stock today."

Of course, there's a lot standing between Tesla and its stock being worth $4,000 a share.

ARK's investment thesis counts on the company fully transitioning from a manufacturer to a full-fledged "mobility-as-a-service" company. When it reaches that point, ARK estimates, its profit margins could be as much as 80%. In it's most recent quarterly filing this month, Tesla reported total gross margins of 15%.

"In the $4,000 scenario, our assumptions are conservative: we incorporate profits only from cars and certain autonomous taxi networks, not from trucks, drones, utility scale energy storage, or the MaaS opportunity in China," ARK wrote.

"Further, we incorporate the roughly $20 billion in dilution that might be necessary to penetrate and scale the latter four markets."

For context, Tesla's average price target among sell-side research analysts is $333, according to Bloomberg. Even the most bullish analyst on Wall Street, Pierre Ferragu of New Street Research, has a target of $533 — a little more than one-eighth of ARK's target.

Musk has argued that going private will ease the burden and shortsightedness that comes from analysts and investors every quarterly earnings report, but ARK argues the opposite will be true.

"I understand why you may want to take Tesla private, but I must try to dissuade you," the letter says.

"First, as a private company, Tesla will be unable to capitalize on its competitive advantages as rapidly and dramatically as it would as a public company, an important consideration given the network effects and natural geographic monopolies to which autonomous taxi and truck networks will submit.

"Second, in the private market, Tesla would lose the free publicity associated with your role as the CEO of the public company not only with the bestselling mid-sized premium sedan in the US, but also arguably in the best position to launch a completely autonomous taxi network nationwide in the next few years."

Shares of Tesla have whipsawed since August 7, the date of Musk's initial announcement that he would attempt to take Tesla private. After soaring to near-record highs of $389, shares fell back below $300 amid reports of a subpoena from the Securities and Exchange Commission and a slew of class-action lawsuits. It's currently trading near $321.

Bloomberg reported Thursday that Musk has hired Morgan Stanley in his bid to take Tesla private. That follows the bank's analyst, Adam Jonas, suspending coverage of the stock on Tuesday, which is typical when a bank's investment banking division is involved in a deal with a company covered by its research department. Goldman Sachs suspended coverage

"As public equity markets continue to go passive, I believe we are witnessing a massive misallocation of capital, with innovation the most inefficiently priced part of the market," ARK said.

"Tesla epitomizes this capital allocation problem and, when the market understands it, your stock should enjoy significant upside, serving as a valuable lesson for public market investors to reconsider their short-sighted ways."