VinFast, the Vietnamese electric vehicle (EV) manufacturer, has experienced a remarkable surge in its stock market valuation, surpassing both Ford and General Motors (GM) during its inaugural day of trading.
The firm’s shares, despite its lack of profitability thus far, concluded at over $37 (£29) each in its first appearance on the New York market. As a result, VinFast achieved a stock market valuation of $85 billion, significantly surpassing Ford’s $48 billion and GM’s $46 billion.
This development transpires as established automobile industry giants and newer contenders vie for a share of the burgeoning EV market.
The successful listing contributed an estimated $39 billion to the net worth of VinFast’s founder and chairman, Pham Nhat Vuong, who was already identified as Vietnam’s wealthiest individual. Regulatory filings reveal his control over 99% of the company’s outstanding shares, predominantly through Vietnam’s premier conglomerate, Vingroup JSC. This concentration of ownership restricts the volume of shares available for external investors, often leading to substantial fluctuations in share prices.
Trading activity involving VinFast was relatively modest on the Tuesday in question, witnessing approximately $185 million worth of its shares being exchanged.
Bill Russo, the CEO of Shanghai-based Automobility, noted, “Investors continue to believe that the future lies in electric vehicles and that a cost-effective East Asian nation will emerge as a formidable contender in the United States. Markets seem to believe that, due to geopolitical factors, Vietnam rather than China will fulfill that role.”
Differing from the conventional approach to share offerings, VinFast opted for a distinct route by going public through a shell company, or a special purpose acquisition company (Spac). Spacs are frequently utilized by startups to expedite the often protracted and costly process of transitioning a private entity into a publicly traded one. Essentially, it involves merging a non-listed firm with one already present on the stock exchange.
Over the last three years, various EV producers such as Lordstown Motors and Faraday Future have adopted Spacs to go public. However, both entities have experienced substantial drops in their market value—surpassing 90%—since their respective mergers.
Mr. Russo expressed optimism about VinFast’s potential for success due to its connection to Vingroup, a business entity with a demonstrated history of growth and access to funding. He stated, “Many EV startups falter as they lack a profitable core and external funding eventually depletes, given their faster consumption of capital compared to generating cash.”
Nonetheless, VinFast confronts stiff competition as prominent industry leaders strive for market dominance. Notably, Tesla led by Elon Musk and BYD, endorsed by seasoned investor Warren Buffett, have been implementing price reductions to boost sales. In contrast, VinFast delivered 11,300 EVs during the first half of the year, whereas Tesla managed to distribute over 889,000 vehicles within the same period.
Dan Ives from Wedbush Securities emphasized, “Tesla will remain the unequivocal frontrunner in the EV sector, but there will be multiple winners.” He added, “VinFast has successfully laid a robust foundation for EV triumph.”
