tesla semi

Elon Musk’s tweet about bringing Tesla private at the price of $420 per share spawned a bit of confusion. Was it a joke? Where did he get the cash? And what would happen to the legions of devoted shareholders who have bought Tesla stock during the near-decade on open markets? Musk answered a lot of those questions in a Tuesday email to employees, but not, reportedly, to the satisfaction of U.S. securities regulators.

That’s according to the Wall Street Journal, which on Wednesday reported that the U.S. Securities and Exchange Commission had made an inquiry with Tesla about the veracity of yesterday’s tweets.

A member of the SEC press office declined to comment to Inverse, and Tesla didn’t immediately respond to a request for comment about the report.

It’s not that unusual for publicly traded companies to go private, and in some ways the move would make sense. Musk likes moonshots, and it’s hard to take moonshots if you’re spending too much time preparing for tedious shareholder calls. Cathie Wood, CEO of ARK Invest shared an estimate from her team’s research suggesting that Tesla could be worth more than 10 times the price Musk named if it can deliver on fully autonomous driving within five years.

Why Is the SEC Looking Into Tesla?

The main reason the SEC appears to be looking into Tesla is that Musk’s approach to going private is highly unusual. Sources told the WSJ the SEC wants to know whether Musk’s initial tweet was true, why it made the disclosure through Twitter, and whether or not Tesla thinks the ruling complies with investor rules. One thing’s for sure, Musk’s approach is pretty unusual.

When Dell Computers went private back in 2013, for example, its executives worked in secret for months, code names and all, and hired a bunch of banks to help them track down the funding and loans they needed to buy back all of the public shares.

Musk, by contrast, just tweeted it out.

This idea that you’d announce the process of taking a roughly $70 billion company private through a tweet has sparked incredulity in the financial press. The Wall Street Journal’s Christopher Mims likened it to Musk’s dubious Twitter assertion that he had received “verbal approval” to develop a hyperloop on the east coast. And Andrew Ross Sorkin, who works at both CNBC and the New York Times said he couldn’t find anyone who could make sense of the proposal.

Of course, it would hardly be the first pronouncement of Musk’s that inspired incredulity from financial types. But an SEC inquiry about your tweets is exactly the kind of thing going private seemed meant to avoid.

Photos via TED