What happened

Shares of electric-car maker Tesla (NASDAQ:TSLA) have fallen today, down by 6% as of 3 p.m. EDT, after The Wall Street Journal reported that the SEC was probing CEO Elon Musk's comments on social media. Regulators want to know if Musk was misleading investors.

So what

Earlier this week, Musk announced on social media that he was "considering taking Tesla private at $420" and that he had already secured funding for a potential deal, leading to shares skyrocketing -- and briefly being halted -- on Tuesday. Seeing as how any such deal would be the largest leveraged buyout (LBO) ever made, plenty of questions have arisen as to where Musk could procure that kind of money. However, the SEC is less concerned about the details of the deal, and more interested in whether Musk was misleading investors.

(Ironically, going private would reduce regulatory scrutiny of Tesla, although would not completely remove oversight.)

Front view of the new Tesla Roadster

Image source: Tesla.

Now what

Musk has a long history of trolling short-sellers, making esoteric jokes and off-the-cuff comments, and otherwise saying inappropriate things on social media. Many have speculated that the reference to a take-out price of $420 per share is a veiled marijuana joke. Tesla subsequently shared an internal email that Musk sent that provides a little bit more detail about what the eccentric billionaire is planning, which gives credence to the idea that the company is seriously contemplating going private. Tesla's board (excluding Musk's brother Kimbal and Steve Jurvetson, who is on leave following sexual harassment allegations) has also confirmed that it is discussing the possibility.

If Tesla can provide sufficient documentation that Tesla is serious about going private and that the whole narrative isn't merely a social media hoax, it should be able to satisfy regulatory inquiries. But investors will still want to know where all that money will come from.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.