VinFast Auto (NASDAQ: VFS) stock is down another 22%. VFS stock has now tumbled to below - just - the IPO price in that despac deal. It should be said that many were predicting this, us included. As we said about VinFast: “VinFast Auto (NASDAQ: VFS) stock is up 90% on the day of its IPO. The VFS stock price performance is more impressive than that of course, it’s rather more like 350% because it really started at the $10 SPAC price. This is not a rational price, not rational at all - this makes the small Vietnamese EV maker worth more than Ford, GM or Stellantis. The market capitalisation is, at $85 billion, substantially more than any one of those three and approaching that of any two of them.” It was, in our minds at least, merely a matter of time before reality intruded.
And now, you know, it has. The trigger here seems to be dual. Firstly, there are reports VFS is seeking more money to be able to open a US car plant. Obviously there are potential worries about whether this might mean more stock and how dilutive any issue might be. The other is that the results are out and they’re not, shall we say, impressive. A sarcastic look here: “So it should be no surprise that VinFast is far, far off-target. The company sold 11,315 vehicles in the first two quarters of 2023, and the vast majority of those were sold to its parent company’s taxi wing. Based on CNBC’s numbers, a mere 4,215 cars were sold to real, human buyers. At this rate, the company could be beaten out for volume by Rolls-Royce. The story gets even worse in the U.S., according to CNBC. VinFast has apparently sold just 137 cars so far in the States — fewer than Toyota sold Grand Highlanders in the first half of the year. The company does still beat out the Alfa Romeo Tonale, though.”
The goals being declared seem more than a little out of reach.
VinFast Auto stock price from Google Finance
In terms of the stock price the problem is really this with VFS: ““It’s also possible to approach this another way, which is to look at the shareholding structure: “VinFast’s billionaire founder Pham Nhat Vuong owns about 99 per cent of its shares, leaving only a small amount available for trading. Only 1.3mn shares of the Spac were able to be traded after earlier redemptions and just $185mn in shares changed hands, according to analysts.” Ah. So while we’ve that heady $85 billion valuation we’ve really only got modest trade in an extremely limited float - that 1% of total valuation being on the market.”
A very thin market indeed therefore. And any price movements - in either direction - are going to be amplified because of it. It is possible to go play in the VFSWW warrants if anyone wants any more excitement. But they’re not trading anywhere near implicit value either.
The very low float means that VinFast Auto is purely speculative at this stage.