VinFast Auto Ltd. of Vietnam recently went public on the NASDAQ stock exchange under the ticket symbol “VFS” via a merger with Black Spade Acquisition Co., a SPAC or special purpose acquisition company, giving it a valuation of $65 billion and more value – at least on paper – than GM or cross-town rival Ford.
As Bloomberg points out, however, the extravagant market capitalization caused by SPAC mergers such as that used by VinFast is often short-lived, with a company at the median losing 45 percent of its value and almost two dozen this year alone shedding 70 percent of their value.
The $65 billion market cap of VinFast could be even more unstable than usual because the stock float available for trading amounts to only 1.3 million shares, so relatively small trades will result in massive shifts in the stock’s price. The company’s founder Pham Nhat Vuong and his wife control 99 percent of shares.
Meanwhile, VinFast needs to greatly accelerate its sales to reach its 2023 target of 50,000 electric vehicles sold, CNBC reports. So far, its attempt to mimic Tesla’s direct sales from company showrooms rather than via dealerships has resulted in fairly sluggish results, with 16,000 vehicles sold in total during January through July 2023.
The only model VinFast currently offers in the U.S., the VF 8, is more expensive than the Tesla Model Y and has only sold 137 units this year, the news report added. While the Vietnamese automaker only operates factories in Vietnam currently, it has already broken ground in late July on a North Carolina facility scheduled to begin production in 2025.
Madame Thuy Le, global CEO of VinFast, nevertheless struck an optimistic note, asserting that the company going public via SPAC merger “unlocks access to the capital markets and important avenues for future development.” She added that the automaker hopes its example will “inspire and unleash greater opportunities for Vietnamese brands to participate in the global market.”
While Thuy Le said the SPAC merger – which saw the stock’s valuation skyrocket 255 percent – will “unlock access” to capital, and VinFast plans to seek more investment over the next 18 months, its search for more investment is also viewed as a potential warning sign by U.S. financial analysts.
The vehicles made by VinFast were designed with the aid of German, Austrian, and Italian automakers and automotive design companies. It also has multiple ties to GM, including acquisition of the GM plant in Hanoi for production and a strategic partnership making VinFast the exclusive distributor of Chevy products in Vietnam.