Title: VinFast Auto’s Stock Soars Despite Massive Losses and Doubts of Institutional Support
Date: [Insert Date]
By: [Insert Author Name]
VinFast Auto, a Vietnamese electric vehicle (EV) manufacturer, recently completed its merger with a Special Purpose Acquisition Company (SPAC) and went public in the US. However, the company’s financials and stock performance have raised concerns among investors and industry experts.
VinFast, a subsidiary of the Vietnamese conglomerate VinGroup, started as a maker of gasoline cars for the domestic market before shifting its focus to EVs and e-scooters. While the company generated a lot of hype with its first 45 EV deliveries in the US earlier this year, its sales figures have been lackluster. According to a Reuters report, VinFast sold only 137 vehicles in the US by the end of July.
The company’s financials are equally troubling. VinFast reported just $65 million in revenues for Q1 but suffered a staggering loss of $598 million in the same period. With losses projected to reach $2.4 billion in 2023, VinFast’s financial outlook appears bleak.
Despite its poor financial performance, VinFast’s stock price skyrocketed after the SPAC merger. On its first day of trading, the stock more than tripled to $37.07 per share, valuing the company at $85 billion. In just nine trading days, the stock surged another 40%, reaching $68.77 per share, and giving the company a market capitalization of $159 billion.
However, critics argue that VinFast’s stock price is based more on speculative trading than on actual market fundamentals. The company has a minuscule public float, with only 0.3% of its shares traded on the market. The remaining 99.7% is controlled by founder and chairman Pham Nhat Vuong, severely limiting price discovery and liquidity.
VinFast’s attempts to secure additional funding through a PIPE (private investment in public equity) deal with institutional investors fell through, indicating a lack of interest in the company. Moreover, most SPAC investors chose to redeem their shares and exit the investment before the merger, leaving only a meager $13.6 million in public capital.
To fuel its cash-burning operations, VinFast intends to leverage its skyrocketing stock price to sell more shares at exorbitant valuations, effectively extracting billions of dollars from American investors. The company has committed support from its parent company and chairman, totaling $2.5 billion, which may buy it some time.
Despite the risks and uncertainties surrounding VinFast, the allure of quick gains persists among investors in this era of meme stocks. The company’s aggressive stock promotion and speculative trading strategies have fueled its meteoric rise. However, the long-term viability and sustainability of VinFast remain questionable.
While it may be acceptable for an automaker to incur substantial losses during the early years of operation, VinFast’s scheme of selling a small number of shares to the public at inflated valuations to extract billions of dollars is highly concerning. As the current generation of EV startups continues to face significant challenges, VinFast appears to be treading on dangerous ground.
As VinFast’s stock price continues to soar, taking investors on a wild ride, doubts persist regarding the company’s ability to secure institutional support and overcome its mounting losses. Only time will tell if VinFast can navigate the treacherous waters of the EV market and emerge as a profitable player or become another cautionary tale in the pantheon of imploded stocks.
Disclaimer: The views and opinions expressed in this article are solely those of the author and do not reflect the official stance of [News Outlet].