VinFast, the Vietnamese electric automaker, has experienced a notable decline in its stock value, marking the third consecutive session of losses for the company’s shares. This downward trend has raised questions about the accuracy of its valuation in the electric vehicle (EV) sector.
The company’s shares, trading under the symbol VFS, faced a substantial drop on Friday, adding to a pattern that has seen its market value plummet by over half since its high-profile listing on the Nasdaq earlier this week. This decline is particularly significant given that VinFast, which is currently unprofitable, had initially garnered a valuation of $85 billion during its debut on Wall Street just a few days prior. However, as of late, its market value had dwindled to $32.4 billion.
The stock’s price per share fell by 30%, settling at $13.94, a sharp decline from its opening price of $22 that had surged to an impressive $38.78 at one point. With founder Pham Nhat Vuong retaining control over roughly 99% of the company’s shares, the limited availability of publicly traded shares has rendered VinFast’s stock particularly susceptible to fluctuations in the market.
Comparing trading volumes, the disparity is glaring—only around $28 million worth of VinFast shares were traded by late morning, whereas Tesla’s shares saw a trading volume of approximately $13 billion during the same timeframe, as per data from Refinitiv.
VinFast’s challenges have extended beyond stock market volatility. The company has encountered difficulties in retaining senior executives and is pursuing an ambitious goal of selling 50,000 electric vehicles within the year. To bolster sales, VinFast is pivoting toward a “hybrid model,” involving distributors and dealers for overseas markets. While some U.S. dealers have shown interest, skepticism lingers among certain analysts.
Jason Benowitz, a senior portfolio manager at The Roosevelt Investment Group, has voiced concerns regarding VinFast’s ability to successfully market vehicles produced and sold in a developing market like Vietnam to discerning U.S. consumers with distinct preferences and expectations. This poses a unique challenge that could impact the company’s success in the American market.
VinFast has disclosed its intentions to secure capital from global investors over the next 18 months. However, this decision may expose the company’s valuation to potential risks. Given founder Pham Nhat Vuong’s ownership stake, the move to public markets could indicate an interest in further monetizing his involvement, which might exert downward pressure on the company’s stock price for an extended period.
VinFast’s stock listing follows a trend set by other EV companies, including Faraday Future, Nikola, and Lucid, all of which have encountered heightened scrutiny from U.S. regulators. Meanwhile, the stock of VinFast’s parent company, Vingroup, Vietnam’s largest conglomerate, also took a hit, closing down 7% during trading in Ho Chi Minh.