This 6-year-old "Vietnam Tesla" has surpassed Volkswagen and Ford in market value, and after landing on NASDAQ, its market value has surpassed Volkswagen and Ford | VinFast | "Vietnam Tesla"

VinFast, a Vietnamese start-up car company founded only 6 years ago, has recently caused a sensation on Wall Street: after its debut in the US stock market, its market value skyrocketed, leaving veteran car companies such as Volkswagen and Ford behind and showcasing the charm of Vietnamese independent car brands to the world.

The public opinion believes that the surge in VinFast's stock price is due to investors' confidence and enthusiasm for electric vehicle startups. However, due to poor sales and revenue, it remains to be seen whether VinFast's stock price can maintain its upward trend and whether the path of globalization is smooth.

Important milestones

On August 15th local time, the stock of Vietnamese electric vehicle manufacturer VinFast was publicly traded on the NASDAQ stock exchange in the United States.

This is not a standalone IPO of VinFast, but rather a merger with Black Spade Acquisition, a special purpose acquisition company owned by Stanley Ho, the son of gambling tycoon Ho You Long, before going public.

According to Singapore's Lianhe Zaobao and other media, because investors' interest in money losing start-ups has weakened in the past year, VinFast has abandoned the IPO transaction and opted to acquire the listing route of companies through special purpose.

That is to say, merge an unlisted company with a listed company and go public. For startups, this can accelerate the process of going public while also reducing costs.

On the first day of listing, VinFast opened at $22, more than twice the initial merger price of $10. Afterwards, the stock price soared all the way, closing at $37.06, an increase of about 255%.

At closing price, VinFast's market value is as high as $86 billion, surpassing car giants such as Volkswagen, Mercedes Benz, Ford, and General Motors.

According to Barron Weekly, VinFast's market value also exceeds the combined market value of all electric vehicle startups in the United States.

"VinFast has officially become a globally listed company and the largest Vietnamese brand by market value listed on the US stock exchange," said Vietnamese news agency.

VinFast CEO Li Qiushui stated that going public in the United States is an important milestone that will open the door to entering the capital market and open up important avenues for future development.

On Wednesday, VinFast's stock price fell to around $30. The Wall Street Journal reported that even if the stock price drops to around $30, VinFast's market value still stands at $70 billion, still higher than other car giants. At the close of Wednesday, General Motors had a market value of approximately $45 billion and Ford had a market value of approximately $47 billion.

Rapid rise in 6 years

From its establishment to listing, VinFast only took 6 years.

VinFast, born in 2017, is known as "Tesla Vietnam" and is a subsidiary of Vingroup, one of the largest corporate groups in Vietnam.

VinFast produces and exports electric SUVs, electric scooters, and electric buses, mainly sold in Vietnam and North America.

According to Vietnam News Agency, VinFast has established a strong position in Vietnam, deploying charging station networks in 63 provinces and cities across the country, and will further expand in the coming years. VinFast has established 122 product showrooms and after-sales workshops worldwide.

The rapid rise of VinFast is believed to be inseparable from solid backing.

VinFast's parent company, Vingroup, has ventured into multiple fields such as industry, real estate, and technology, achieving a revenue of $4.4 billion in 2022.

As VinFast's stock price soared, Vingroup founder and Vietnam's richest man, Fan Riwang, also saw his net worth soar to $44.3 billion.

Fan Riwang's experience is also quite legendary. He was born in Vietnam, but moved to Ukraine in the early 1990s. Prior to that, he was studying geoeconomic engineering in the Soviet Union.

His business empire was built on a small bag of instant noodles - he started by creating a noodle enterprise and was known as the "instant noodle king" of Ukraine, which was later sold to Nestle.

After returning to Vietnam in 2001, Fan Riwang devoted himself to real estate and founded Vingroup, covering apartments, hotels, office buildings, shopping centers, and more.

When establishing VinFast, Fan Riwang vowed to build the first "Vietnamese car" within two years. I didn't expect to achieve my goal the next year.

In 2018, VinFast acquired General Motors' automotive production line in Vietnam. At the end of the same year, VinFast announced an annual production capacity of 250000 vehicles, becoming Vietnam's first national automotive brand with mass production capacity. In 2021, VinFast launched its first electric vehicle, VFe34, transitioning towards new energy vehicles.

In March 2022, VinFast announced that it would invest $4 billion to build a new car factory in North Carolina, USA.

Now, VinFast has taken another step and landed on the US securities exchange.

Potential or foam?

A car manufacturing company that has only been established for 6 years, its stock price skyrocketed like a rocket, leaving the outside world amazed.

Some analyses suggest that part of the reason is that only a small portion of stocks can be traded.

According to media reports such as the BBC, due to Fan Riwang's 99% stake in VinFast, only a few million out of 2.3 billion circulating stocks are tradable.

On Tuesday, VinFast's trading was relatively light, with a turnover of approximately $185 million.

"The limited inventory supply may trigger some interesting things. A better answer may be that the stock is starting to rise, so traders are flocking in," analyzed Barron Weekly.

Some comments also suggest that the sharp rise in stock prices reflects investors' enthusiasm for electric vehicle startups.

"Investors still believe that the future belongs to electric vehicles, and a low-cost car making Southeast Asian country will become a competitor to the United States," said Rowe, founder and CEO of Shanghai based Automobile

"Wall Street is all focused on the next leader in the electric vehicle industry, and many car companies, including Tesla, will become winners in the green electric vehicle wave in the coming years," said Dan Aives, an analyst at Wade Bush Securities.

However, behind the soaring share price, it is also questioned that the foam is too big.

Morningstar auto industry analyst David Weston said that it is unreasonable for VinFast to approach BMW's valuation and surpass GM and Ford's, and the SPAC foam of electric vehicles has not ended.

The so-called "unreasonable valuation" by analysts may be related to VinFast's imperfect sales, revenue, and quality.

According to CNN, VinFast has exported nearly 3000 cars to North America since the end of last year. Data shows that as of June this year, VinFast has only sold 137 electric vehicles in the United States.

By contrast, Volkswagen sold 4.4 million cars in the first six months of this year, of which over 321000 were electric vehicles.

Meanwhile, VinFast has yet to make a profit, but is constantly burning money. In the nine months ending September last year, the company incurred a loss of $1.4 billion. As of the end of September last year, the company still had approximately $2.5 billion in debt. In the first quarter of this year, the company incurred a loss of approximately $600 million, but spent over $1 billion to expand its business.

Business consulting firm iResearch estimates that electric vehicle manufacturers need to sell 400000 vehicles annually to recoup costs. So far, VinFast has released four electric models and delivered approximately 19000 vehicles.

In May of this year, VinFast recalled electric SUVs shipped to the United States due to software malfunctions and received negative reviews. VinFast also laid off some American employees.

Facing fierce competition

Regarding the stock price trend of VinFast, Barron Weekly stated that investors still need to be patient and wait for a period of time.

Generally speaking, analysts usually need several weeks to focus on a new stock. Compared to traditional IPO financing, companies like VinFast that finance through mergers with SPAC require longer time on Wall Street.

In fact, electric vehicle manufacturers that were previously listed through SPAC have performed poorly.

For example, car companies such as Lotsdown Motors, Nikolai, and Faraday Future Electronics have all lost over 90% of their market value after merging and going public under the SPAC model.

The Lianhe Zaobao said that if VinFast's share price could keep rising, it would show unique value.

VinFast is ambitious about his future.

Last month, VinFast announced that a new electric vehicle factory in North Carolina had broken ground and is expected to start operating in 2025. The factory can produce 150000 cars annually in the future and hopes to become a sales base in the United States.

VinFast also stated that it will soon enter the European market and tap into the potential of the Southeast Asian market.

However, VinFast still has a long way to go to compete with established companies in the industry.

The BBC believes that VinFast faces fierce competition as major players compete for market dominance. Leaders such as Tesla and BYD have been lowering prices recently to boost sales. In the first half of this year, VinFast delivered 11300 electric vehicles. By contrast, Tesla delivered over 889000 vehicles during the same period.

Some comments point out that for VinFast, the most challenging task currently is whether it can achieve the sales target of 50000 cars set by the founder this year.