How Will This New SEC Investigation Affect Tesla Stock?

Once again, the Securities and Exchange Commission (SEC) has Tesla (TSLA 0.66%) in its sights -- this time over the controversial merger with SolarCity. While Tesla has managed to dodge serious consequences for transgressions in the past, some investors think this time might be different. Will it?

In this Motley Fool Live video, recorded on Dec. 9, Industry Focus host Nick Sciple and Motley Fool senior auto specialist John Rosevear consider that question in light of Tesla's history with regulators, and how this latest investigation is likely to affect (or not affect) Tesla's stock. 

Nick Sciple: Let's talk about Tesla now. It had a strong earnings report, but as always with Tesla, lots of other headlines out there, Elon has sold a significant amount of stock, and there are some reports this week about some SEC-related investigations related to solar panels. What do you make of all the news around Tesla?

John Rosevear: I mean, Tesla is an entire beat for a couple of reporters all on its own. There are major publications who have people on the Tesla beat full-time. Elon selling given where the stock is, I'm not really surprised [laughs] I'd probably be selling, too. Years and years ago, Elon said his capital would be the last out around the time of Tesla's IPO. But I mean, he did at least make a show of going to Tesla fans and Tesla's shareholders on Twitter and saying, "Hey, look, I'm thinking about selling. Are you OK with that?" and the response was sure Elon, sell a bit. He has been doing that. But more to the SEC investigation, there was a battle between Tesla's solar division, the company formerly known as SolarCity, had to deal with Walmart to install solar panels on the roofs of its stores and the installations didn't go well and there were some fire issues and some complaints, and there was the battle back and forth. Now, this is the SEC stepping in and saying, we're going to take a closer look at this. We're going to look at whether you warned your investors properly that there was some risk here. What I'm wondering is if they're going to go way back and reopen the SolarCity merger, which was billed as this is a whole brand new component for Tesla. Detractors said it was Elon bailing out his cousins who had started SolarCity, the solar panel firm. I don't know where this goes. Previous SEC investigations have not had much impact on Tesla, either on its share price or on its behavior. So I don't know what this is going to do either. I wouldn't expect too many fireworks. Just based on past history.

Sciple: Yeah. What I would say is, the strength of Tesla's business is much stronger than maybe it would've been previously, and there have been similar headlines that the company has persevered through. I think, I wouldn't blame shareholders for looking through some of the stuff as well.