VinFast Auto (NASDAQ: VFS) (NASDAQ: VFSWW) stock is up 18%. VFS stock has risen for no reason that any one can see. There’s no announcement of anything new, simply that rise in the stock price. Obviously, something has caused it but as far as it’s possible to see it’s just that more people wanted to buy in. No substantive or objective reason other than that. It’s also not just us saying that, here’s Barron’s: “This EV Stock Is Ripping Higher. There Is No Reason.” The rest of the EV market is having a hard time of it - concerns about falling levels of sales growth plus looming competition from cheaper Chinese manufacturers. But one single company swimming against that tide and we can’t see - other than that it is happening - any reason why it should.
Sure, there’s effort here: “Vietnam’s richest person, billionaire Pham Nhat Vuong, didn’t become worth over $4 billion without taking some risks. His current venture is to create Vietnam’s first global automaker, VinFast Auto, and he’s betting over $10 billion to make the company into a viable brand in the global electric vehicle market. But its journey so far has been bumpy, and there’s skepticism about whether it can compete outside its home country. Still, VinFast’s CEO, a former banker, is full of confidence. “Our mission is to make EVs accessible to everyone,” says Le Thi Thu Thuy, 49.” But there’s not a vast amount of evidence or proof that this adventure is going to be successful.
As we’ve said before about the VinFast IPO: “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.”
Not a rational valuation, even though it did go higher from there.
VinFast Auto stock price from Google Finance
As we’ve also said about VFS stock: “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.” Reality does intrude, eventually.
Our read on this is that VinFast has simply become a speculative stock - speculators have positions in it so therefore the price is driven by changes in speculative sentiment. As such it’s therefore worth thinking about playing in the warrants, VFSWW. They moved 45% yesterday, not the 18% of the underlying stock. If the market is entirely speculative then why not speculate with leverage?
