By
Bhushan Akolkar
October 27th, 2023
VinFast shares jumped nearly 70% following its trading debut and is worth more than Kia and Hyundai combined. However, VFS may be too costly.
Vietnamese-founded electric vehicle (EV) maker VinFast (VFS) has seen a significant share price spike after its US trading debut. After listing on the Nasdaq, VinFast shares rose, resulting in a market value larger than global heavyweights like GM, BMW, Volkswagen, or Ford. The EV maker’s valuation, at Tuesday’s close, was also higher than the combined valuations of Kia Corporation and Hyundai Motor Company.
VinFast completed its Nasdaq launch on Tuesday after merging with BlackSpade Acquisition, a special purpose acquisition company (SPAC). A SPAC typically uses an initial public offering (IPO) to raise funds to acquire an existing company. The SPAC method is a popular way foreign companies list outside their primary jurisdiction.
On Tuesday, VinFast closed at $37.06, 68.4% higher than its $22 opening price. Unfortunately, VFS fell 18.75% on Wednesday and closed at $30.11. The EV maker’s shares have fallen further in after-hours trading, losing another 4.68% and ending at $28.70.
In a recent interview, VinFast CEO Lê Thị Thu Thủy said the company’s initial plan was to list via a regular initial public offering (IPO). However, VinFast decided to go the SPAC route due to market conditions.
“We were ready to do a traditional IPO. We pursued the path for almost two years but the markets have been challenging so we decided to decouple the listing from the fundraising. We got the financial backing from our parent company and we went ahead with the listing by way of SPAC.”
The CEO has also added that the SPAC method was “just a way” to list in the US. Lê Thị Thu Thủy said the company did not necessarily consider the reputation of SPACs.
Are VinFast Shares Too Expensive?
VinFast shares may be too expensive. The continuous fall in share price might directly reflect this price bloating, especially if VinFast is worth more than some of the more established automakers.
The Vietnamese company does have a few things working for it. For instance, VinFast already has the capacity to produce 300,000 units annually. The company also manufactures several other electric products, including scooters and buses. In the first half of 2023, VinFast sold 850 VF8 electric SUVs in California. The company is also building another production plant in North Carolina to shore up its numbers.
Regardless, there is still the worry that VinFast shares may be a little too overpriced. However, since VFS only just debuted, it is too early to properly evaluate the share price from an educated perspective. Analysts on Wall Street would need a few weeks at best, maybe longer, since VFS’ trading debut was a SPAC merger. At the moment, investors would have to look at the numbers and read meaning into them on their own. Also, since the EV maker is not yet profitable, sales may be the primary metric for calculation. Nonetheless, shares might also fall further after the initial trading debut excitement fades.