Are the Shorts Right About This Automaker?

The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes discusses topics across the investing world.

In today's edition, Brendan takes a look at the most shorted automaker on U.S. exchanges: Tesla. About 34% of Tesla's float is shares sold short, not particularly surprising for a company that's still not making money. But Brendan thinks the shorts are wrong. Tesla has done a great job increasing orders for its flagship Model S sedan, and will introduce an SUV and possibly a more affordable small car in the future. The biggest test for Tesla is whether it can produce and deliver these orders on time, an area where the company is looking good as well. But while Brendan certainly wouldn't short Tesla, the stock's still just a bit too risky for him. Whether the electric vehicle can go mainstream is still very much up in the air, and Tesla could have issues if some of the major automakers with their deep pockets make EVs more of a priority.

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At the time this article was published Brendan Byrnesowns shares of Ford. The Motley Fool owns shares of Ford and Tesla Motors.Motley Fool newsletter services recommendFord, General Motors, and Tesla Motors . Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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