What have you experienced? The stock price plummeted by nearly 70%! Vietnam's new car making force, which once made it into the top three in the world

In August, Vietnamese automaker VinFast, which went public in the United States, frequently made headlines in major financial media because its stock price experienced a roller coaster like surge and drop in just over two weeks, with a rise of nearly 700%. As of the close of this Friday, its stock price has fallen by about 68% from its peak, and its market value has evaporated over 120 billion US dollars. What are the reasons behind the ups and downs of VinFast's stock price?

Rising and falling sharply

Vietnamese automaker VinFast's stock price trend attracts attention

△ Video from CCTV Finance's "Tianxia Finance" program

Surprisingly, VinFast's stock price rose by over 250% on its first day of listing in the United States

VinFast, Vietnam's first electric vehicle manufacturer, went public on the NASDAQ stock market on August 15th and rose by 255% on the first day. Subsequently, the stock price experienced significant fluctuations. After six consecutive trading days of gains, as of the close of August 28th, its stock price rose nearly 700%, and the company's market value increased to over 190 billion US dollars, more than the combined market value of Mercedes Benz, Volkswagen, and General Motors on that day. It once became the third largest automaker in the world in terms of market value, second only to Tesla and Toyota.

VinFast stocks have low liquidity and high volatility

Bloomberg reported that the main reasons driving VinFast's stock price surge include low liquidity and the influx of retail investors.

According to regulatory documents, 99.7% of VinFast's shares are controlled by the founder of the company's affiliated group, with only approximately 1.3 million shares available for trading. In a situation where there is very little circulation, if a buyer seizes enough shares, it may drive up the stock price. On the contrary, stock prices will plummet.

VinFast's backdoor listing attracts retail investors to make blind box investments

In addition, VinFast's listing through SPAC has also attracted the attention of retail investors. The so-called SPAC, abbreviated as "Special Purpose Acquisition Company" in English, is a shell listing method. This listing method is simpler in process compared to traditional IPOs, making it the preferred choice for many innovative and growth companies that want to quickly go public and raise funds. For example, Virgin Galactic, as well as electric vehicle manufacturers such as Nikola and Lotsdown, all go public through this method.

VinFast Stock Market "Proud" Performance "Disappointed"

In sharp contrast to VinFast's stock price, its performance can be described as mediocre. Last year, the company's new car sales were only 24000 units, compared to Mercedes Benz, which was once left behind by its market value, with new car sales exceeding 2 million units last year.

Therefore, some market participants have expressed concerns about the future trend of VinFast stocks. VinFast was founded in 2017 and is affiliated with Vingroup, the largest private group in Vietnam. The company began launching internal combustion engine vehicles in 2018, electric vehicles in 2021, and completely discontinued internal combustion engine vehicles by the end of 2022.

In the past few years, VinFast has received over $9.3 billion in financing, but so far, the company has not achieved profitability, with a net loss of $1.348 billion in 2021; In 2022, the net loss was 2.112 billion US dollars, and as of the end of March 2023, the loss for this year has been 590 million US dollars.

New forces in Vietnamese car manufacturing

VinFast actively explores the local market

△ Video from CCTV Finance's "Tianxia Finance" program

VinFast's high-profile debut in the US stock market has attracted the attention of many investors. How does it perform in the automotive sales market? The CCTV reporter recently visited its dealership in Hanoi, the capital of Vietnam.

In Vietnam, people mainly travel short distances, and there are no cold regions in the country, so there is no "mileage anxiety" problem that troubles many electric vehicle owners. VinFast, as Vietnam's first electric vehicle brand, quickly gained market recognition after its launch.

Front desk reporter Fu Xinri: The staff said that the best-selling small car in their store is now this one, priced at around $20000, and can sell nearly 100 units per month. In addition to conventional sales methods, VinFast Group has also established its own taxi company to increase vehicle sales in this way.

VinFast's sales in the US are still in its early stages of expanding into the European and American markets

The reporter then experienced a VinFast taxi, and compared to international brands, this electric car still has certain gaps in chassis shock absorption, sound insulation, and seat comfort.

According to VinFast's layout, the company focuses on the US and European markets overseas. According to the plan, VinFast will open a total of 50 display stores in Europe to deepen the connection between the brand and potential customers. In March of this year, its VF8 models began to be delivered in the United States, but as of June, only 137 were registered on the road in the United States.

Analysts point out that the low sales of VinFast in the international market are closely related to its insufficient research and development capabilities. In the early stages of car manufacturing, VinFast collaborated with component companies to purchase mature products and technologies, and assembled the entire vehicle. The current electric vehicle production also uses this model.

Saboni, Global Automotive Planning and Solutions Director at S&P: We currently do not see VinFast attempting to increase investment in research and development, such as the development of high-performance three electric systems or mature advanced autonomous driving technology. It has not taken the development of these technological directions as a selling point for vehicles, but rather delivers a complete and capable vehicle to consumers.

Over 620 VinFast electric vehicle cooperative suppliers

According to VinFast's prospectus, the company has collaborated with over 620 global suppliers in the electric vehicle sector, making it difficult for it to lower costs in the short term and thus have a price advantage. Taking the US market as an example, the starting price for a VinFast VF8 is $46000, equivalent to approximately RMB 330000. Tesla, a local American brand, can enjoy tax breaks under the Inflation Reduction Act, with its Model Y model starting at less than $40000 in the United States.