Two weeks after going public, an unprofitable Vietnamese electric vehicle company is not just the third most valuable automaker in the world but also more valuable than companies like Goldman Sachs and Boeing.
VinFast Auto Pte. Ltd. shares increased by another 20% on Monday, bringing its total gains since its debut on August 15 to around 700%! The stock presently has a market capitalization of $190 billion, significantly more than the $111 billion of Goldman Sachs and the $137 billion of Boeing.
On Monday, the stock increased its market capitalization by about $33 billion at the day’s high. After Toyota and Tesla, the firm is currently the third most valuable automaker in the world. The market capitalization of VinFast is far higher than the combined worth of venerable automakers like Ford and GM.
The problem is that VinFast hardly ever has any public floats. According to SEC documents, Pham Nhat Vuong, the founder of parent conglomerate Vingroup and Vietnam’s richest man, controls practically all of the company. A 99.7% ownership stake in VinFast belongs to Vuong.
The lack of a public float makes the stock volatile, as evidenced by its decrease or increase by at least 14 percent in 11 of the last 12 trading sessions.
In just ten trading sessions, the market capitalization of VinFast has surpassed $200 billion. Tesla reached the same market capitalization in just under 3,600 sessions, whereas it took Nvidia 7,700 sessions to get this level.
Through a Special Purpose Acquisition Company (SPAC) merger with the blank-check business Black Spade Acquisition Co., established by casino mogul Lawrence Ho, the Vietnamese Automaker went public on August 15 of this year.
A Special Purpose Acquisition firm (SPAC) is a specific investment vehicle designed to raise money through an IPO to buy a private firm. Given that they do not have a particular acquisition target, they are called “blank-check” corporations.
SPACs have a set window of time to merge with another business. The SPAC is subsequently liquidated, and all monies are returned to the investors if the merger or acquisition does not take place within 18 to 24 months. The fixed IPO price for SPACs is $10.
Sales are expected to reach 45,000 to 50,000 this year, according to VinFast, which started constructing a facility in North Carolina last month. According to Vuong, the company will break even by 2024. Due to weak sales, the business in May returned all-electric sport utility vehicles that had been shipped to the US and reduced some of its US staff.
There is a feeling of deja vu when seeing the motions in VinFast. Rivian Automotive Inc., a maker of electric vehicles, had a similar craze in 2021. The stock, which sold for almost $13 billion, was the largest IPO of the year. Within two weeks of their initial public offering, shares increased from $78 to $178 before the fundamentals caught up with them, and they crashed.
Rivian’s shares are currently hovering at $20, with an all-time low of $11. The market is still frothy according to this advance, according to Miller Tabak & Co. chief market strategist Matthew Maley. He continued, “It will take more of a full-blown correction of around 10% or more to bring some real panic back into the marketplace.
