VinFast Auto, a burgeoning electric vehicle (EV) start-up, has made quite the splash with its recent debut on the Nasdaq. Closing at an astounding $37.06 per share, the stock saw an impressive 255% surge, propelling VinFast’s market capitalization to approximately $86 billion. To put this into perspective, it surpasses the combined market capitalization of well-established automotive giants like Ford Motor, General Motors, Volkswagen, BMW, Hyundai Motor, and Kia.
In fact, VinFast has even managed to outshine the entire cohort of EV start-ups in the United States, overtaking the valuation of successful entities like Li Auto and even outpacing the Chinese EV frontrunner BYD when accounting for debt and cash.
Indeed, these numbers are nothing short of remarkable.
With its exceptional production capacity of around 300,000 EVs and the forthcoming construction of a new factory in North Carolina, VinFast is poised for further growth. The company has already achieved commendable sales figures, delivering 11,300 EVs in the first half of 2023. Backed by Vietnam’s influential VinGroup, VinFast enjoys substantial support. Additionally, boasting a diverse range of EV models, the company has boldly ventured into the U.S. market, successfully selling 850 VF8 electric SUVs in California during the same period. CEO Thuy Le affirms that VinFast has plans to expand its sales across the rest of the U.S.
However, despite these impressive achievements, the question remains: is a staggering $86 billion an accurate valuation? Currently, no Wall Street estimates exist for this stock, as it typically takes a few weeks for analysts to initiate coverage on newly listed companies. This process may take a bit longer for VinFast given its fundraising through a SPAC merger, compared to a traditional IPO.
The future of VinFast’s stock has yet to be predicted, but one thing is certain: its rise in the EV industry is undeniable. As the world eagerly looks on, only time will reveal the true value hidden beneath this lofty market capitalization.
VinFast’s Valuation and Potential Challenges
VinFast, a prominent automotive company, is currently valued at approximately $4.4 million per car sold when considering debt and cash. However, based on its production capacity, the valuation stands at around $300,000 per car. In comparison, Rivian Automotive (RIVN) carries valuations of about $275,000 and $93,000 respectively, which are significantly lower than VinFast’s numbers.
In terms of valuation multiples, VinFast’s estimated 2023 sales suggest a valuation that is 47 times its revenue. On the other hand, Tesla (TSLA) trades around 8.3 times its revenue, while Li trades at approximately 2.6 times.
Upon evaluating these figures, it becomes evident that VinFast appears expensive. The recent SPAC merger valued the company, inclusive of cash and debt, at roughly $27 billion. The surge in share price is somewhat mysterious, with only a small portion of shares available for trading out of 2.3 billion outstanding shares. Limited stock supply often leads to unpredictable market behavior, as traders tend to pile into such stocks.
While the future trajectory is uncertain, it is likely that the stock will eventually decline. This decline will not be due to any fault of the company itself but rather due to market dynamics.
Several factors contribute to the anticipated fall in VinFast’s stock. Firstly, the company has yet to turn a profit and expended over $1 billion in the first quarter of 2023 to establish its business. The current cash position remains uncertain; however, recent SEC filings suggest holdings of less than $1 billion. As the company becomes publicly traded, investors can expect regular financial updates. To meet its capital requirements, VinFast may need additional funding from VinGroup or public investors, leading to dilution of existing shareholders’ ownership stake through the issuance of more shares.
Another factor that will likely result in declining share prices is the eventual waning of initial enthusiasm. Determining when this will occur is challenging, as the market’s behavior can be enigmatic. Nonetheless, the initial surge in stock value is unlikely to be sustained indefinitely.
In conclusion, despite its high valuation and the initial hype surrounding the company, VinFast is expected to face challenges that will ultimately drive its stock prices lower. Investors must remain cautious and evaluate the situation carefully, considering both the company’s prospects and broader market dynamics.
Breaking News: Significant Drop in Stock Prices
In a dramatic turn of events, the stock witnessed a staggering 17% decline, plummeting to a new low of $30.85 in early morning premarket trading. This unfortunate occurrence has undoubtedly rattled investors across the board.
Amidst this chaos, it is noteworthy that both S&P 500 and Nasdaq Composite futures have experienced a minor dip of 0.1%. These subtle fluctuations are indicative of the larger market response to this unsettling event.
As the situation continues to unfold, we anxiously await further updates on how this unprecedented decline will influence the future trajectory of the stock market. Stay tuned for more information as we closely monitor these developments.