VinFast stock tumbles to new low as NC-bound EV maker now worth less than initial target
The Vietnamese electric vehicle maker VinFast saw its volatile stock dip beneath a symbolic threshold Monday, as the North Carolina-bound car company is now trading below the initial valuation it set for itself ahead of going public this summer.
VinFast lost nearly 22% of its market value on Monday, finishing with a share price of $9.80. This gave the automaker a valuation of $22.96 billion, below the $23 billion value the company targeted when it agreed to reach the stock market in August through a special purpose acquisition company, or SPAC.
In SPAC deals, the target valuation revolves around a share price of $10. This summer, VinFast issued nearly 2.3 billion shares, which gave the company a projected valuation of about $23 billion.
Some financial experts scoffed that the six-year-old startup with little track record of selling electric vehicles could be worth this much, but VinFast initially defied expectations.
The company closed its first day of trading on Aug. 15 at around $37 a share, giving it a higher market capitalization than that of Ford or General Motors. Within two weeks, the stock would eclipse $82 a share, making VinFast the world’s third most valuable car company at $191 billion — behind only Tesla and Toyota.
However, since late August, VinFast’s share price has plunged. On Monday alone, the company went from being the 16th most valuable automaker on the market to the 21st.
Signs that VinFast’s stock surge was too good to be true
Many had cautioned against reading too much into VinFast’s initial market success. The company is considered an extremely low-float stock because it made relatively few of its shares available to be traded. According to the company’s Oct. 2 financial prospectus, 98.6% of VinFast shares are controlled by its parent group’s chairman, Pham Nhat Vuong.
Low-float stocks are prone to greater pricing swings, said Michael Ohlrogge, a law professor at New York University who studies financial regulation. And many companies that went public by merging with SPACs, he said, are known to have their share price rise initially before falling well below their target valuations.
“This is the standard pattern for SPACs,” he said. “It takes time for prices to drop post-merger.”
The company searches for more funding
The EV maker’s roller-coaster experience on the stock market comes as it seeks additional financing to build a future $4 billion manufacturing and assembly plant in Chatham County.
The site is roughly 30 miles southwest of Raleigh near the small town of Moncure. VinFast and state officials anticipate the plant will employ at least 7,500 people by 2027. Earlier this year, VinFast postponed the opening of this factory from 2024 to 2025.
The Chatham plant will also be costly. In its Oct. 2 prospectus, VinFast said it expects “the development of phase 1 of this manufacturing center to be $1.7 billion.” The company noted it’s already spent around $132 million on the site as of June 30.
Elsewhere in its public filing, VinFast acknowledged the company “will require significant additional capital to support business growth.”
Until 2021, VinFast produced gas-powered vehicles in Vietnam. That year, it pivoted toward manufacturing electric cars for drivers both in its home country and abroad, and the company has since lost more than $4.5 billion as it tries to make this transition.
In addition to raising capital on the stock market, the company has sought a $1.4 billion loan from the U.S. Department of Energy, through a program designed to bolster U.S. production of fuel-efficient vehicles. Its loan application has not yet been approved.
Hasn’t found a global market
VinFast has yet to see robust demand for its fleet of electric SUVs abroad. While it has showrooms in the United States and Europe, most of its EV sales have so far gone to customers in Vietnam.
Of the roughly 11,300 EVs VinFast delivered over the first six months of 2023, more than half (around 7,100) were bought by Green and Smart Mobility, a Vietnamese taxi service controlled by VinFast’s parent company Vingroup, filings to U.S. financial regulators show.
As of July, there were only around 350 VinFast vehicles on the road in the United States.
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