VinFast Auto stock is once again experiencing a rapid surge in Tuesday trading, which has caught the attention of traders seeking lucrative opportunities. However, it is crucial to maintain a balanced perspective and avoid succumbing to the fear of missing out (FOMO).
During the trading session, shares of this Vietnamese electric-vehicle start-up witnessed a remarkable increase of approximately 109%, reaching a price of nearly $37 per share. Meanwhile, the S&P 500 experienced a decline, and the Nasdaq Composite managed to secure a modest gain. The share value of VinFast reached its all-time highest point for the day.
Interestingly, there does not seem to be a specific catalyst for this notable movement in the stock. The trading of “VFS” shares commenced recently following the successful completion of the company’s merger with a special-purpose acquisition company. Prior to this merger, the stock symbol was known as “BSAQ.”
In an incredibly short timeframe, the “VFS” stock catapulted from $10 to approximately $37. The initial trading stages of SPAC-related shares often exhibit significant volatility. This can be attributed to various factors, such as the limited availability of VinFast’s 2.3 billion outstanding shares for trading, resulting in a supply/demand predicament. Additionally, since there is no Wall Street coverage currently available, investors are unable to rely on financial projections and relative valuations.
With these recent developments, it is vital for investors to approach the situation with careful consideration and avoid making impulsive decisions driven solely by short-term market fluctuations.
Introduction
The market valuation of VinFast, a relatively new player in the automotive industry, has raised eyebrows among industry experts. Despite being unprofitable and lacking positive free cash flow, the company’s market capitalization hovers around $90 billion – surpassing both Ford Motor and General Motors. Surprisingly, it is also four times more valuable than Rivian Automotive, a company that sells a greater number of vehicles. Even Li Auto, a profitable EV start-up that outsells both VinFast and Rivian, pales in comparison to its valuation.
Sales Figures
In terms of sales during the first half of 2023, VinFast managed to sell approximately 11,300 vehicles. In the same period, Rivian sold roughly 20,600 vehicles, while Li achieved an impressive sales figure of nearly 140,000 units. Interestingly, Li’s stock trades at only 2.5 times its estimated 2023 sales, whereas VinFast’s stock trades at a whopping 47 times.
Overvaluation Concerns
What Should Potential Investors Do?
For prospective investors who have not yet entered the market, it is advisable to exercise caution and wait for clearer evaluation metrics. The SPAC deal originally valued VinFast at $23 billion, or approximately $10 per share. This starting point should serve as a benchmark for analysis. Given the choice between VinFast and a more established company like Rivian, investors may want to deliberate before making any investment decisions.
The Path Ahead
As industry observers, we too will adopt a wait-and-see approach. It is highly likely that the stock will experience a downward trajectory in the coming months, if not sooner. The future path it takes may alleviate the Fear Of Missing Out (FOMO) syndrome that currently hovers over investors.