The stock market often offers surprises, but also things that are almost absurd, and a Vietnamese car company that just went public was briefly worth $85 billion. VinFast is the name of the company, it produces electric cars, it wants to conquer the world markets, but so far it has delivered 19,000 vehicles and has not made a profit.
VinFast VF8Foto: Shutterstock
Is VinFast moving “too fast”?
VinFast, a company owned by the richest man in Vietnam, listed in New York, and on the first day of trading the shares reached a maximum that meant it was valued at 85 billion dollars. For comparison, the Volkswagen Group has a capitalization of 70 billion dollars, Ford has 48 billion, and General Motors, 46 billion.
On the first day, VinFast shares worth 185 billion dollars were traded, which is not a very large sum, if we think about the capitalization.
VinFast is 99% owned by Vietnam’s richest man, Pham Nhat Vuong, through Vingroup and other entities. VinFast was created in 2017 and has been producing electric SUVs since 2019, which it sells in Vietnam and North America, and with which it has big plans in the US market, where it has delivered 3,000 cars so far.
The head of VinFast says production could reach 50,000 cars this year.
The company has launched four car models and delivered just 19,000 cars in its short history, but it has high hopes for the US market and would like to launch in Europe as well, promising the first showrooms in Paris and Cologne.
A very difficult road for the Vietnamese
VinFast has a tough road ahead, as many new car companies fail to produce much, get enough funding and scale production to a level where they can make a profit. As Tesla Motors’ track has shown, it takes years for a new automaker to build hundreds of thousands of cars a year.
For some investors, the fact that this company is from Vietnam is also important, a country that is seen as a viable alternative for companies that, for various reasons, can no longer produce as much in China.
VinFast machines were tested by journalists in the US, and some reviews were not very encouraging, while others pointed out that we need to be patient with them.
The American market is very competitive, customers are demanding, and the number of electric models on sale has increased a lot in the last three years.
VinFast delivered 11,600 cars in the first six months of the year and lost $1.4 billion in the last nine months. The company has debts of 2.5 billion dollars.
Although the capitalization is staggering, VinFast is a low-float company, which means there are few shares to trade, only 1.3 million, so the value of the shares will be subject to strong fluctuations.
VinFast entered the Nasdaq Global Select Market under the symbol VFS, but it was not a conventional listing, but a SPAC, which means that VinFast used a shell company, SPAC (special purpose acquisition company) to list. Startups often use SPACs to go public faster and with lower expenses.
Other new car companies such as Lordstown Motors and Faraday Future have gone public with the help of SPACs.
Surse: Bloomberg, BBC, AFP, Reuters
2023-08-16 11:38:00
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