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VinFast Charges Ahead: Vietnamese EV Maker Surpasses Ford In Stock Market Valuation

Electric vehicle (EV) maker VinFast created a stir in its Wall Street debut on Tuesday, landing a valuation above industry heavyweights Ford, General Motors and Volkswagen.

Investors don’t seem to be deterred that the company is yet to make a profit, nor that it delivered just 11,300 EVs in the first half of 2023.

Key Takeaways

  • Shares in VinFast surged 270% on its first day trading on the NASDAQ, closing at $37.
  • This gives the electric car manufacturer a valuation of $85 billion, approaching double that of Ford’s $48 billion.
  • VinFast is a Vietnamese company run by Pham Nhat Vuong, who made $39 billion through the listing.
  • The company builds and sells electric cars, scooters and buses in Vietnam and the US.

VinFast Goes Public Using A SPAC

Instead of a traditional equity offering, VinFast went public using a Special Purpose Acquisition Company (SPAC), Black Spade Acquisition Co.

SPACs provide a faster and more affordable route to taking a private company public. They do this by merging a private company with a company that is already listed on a stock exchange.

SPACS have proven popular in recent years, with other EV makers also following this approach, including Nikola and Intelligent Electric, though both have since lost more than 90% of their value.

Investors Vote With Their Wallets

Still, previous horror stories don’t seem to have dampened the spirits of Wall Street investors.

This could be, in part, because VinFast is backed by Vingroup, the biggest conglomerate in Vietnam, which is also owned by Mr Vuong.

So where previous EV newcomers have run out of funding faster than they can bring in revenue, VinFast arguably has deeper pockets.

Vuong controls 99% of the company’s outstanding shares, primarily through Vingroup.

Of course, this also limits the supply of shares, which could result in significant price fluctuations.

Is It Overpriced?

Are the markets saying that Vietnam, rather than China, will be the low-cost East Asian country to rival the US?

Are they also suggesting that VinFast has what it takes to compete with Tesla, which continues to dominate the EV market?

Nobody knows for sure, but this initial stock market valuation feels very optimistic, bordering unrealistic.

Of course, the hardest part isn’t judging if the price is going to turn, but when…