Vietnamese
electric vehicle manufacturer unexpectedly emerged as one of the most valuable
carmakers in the world. When we are writing this article, VinFast’s
capitalization is being exceeded only by Tesla and Toyota. But chances are,
you’ve likely never even heard of this company. So, it’s time to remedy the
omission and decide if investing in VinFast stock could be a smart move.
VinFast
is a Vietnamese company and a part of Vingroup, engaged in multiple fields of
activity – from cybersecurity and electric cars to pharmaceutics, real estate,
and fashion. Just to clear things up, of course, the naming of every subsidiary
starts with Vin.
VinFast
began with car sales, later securing a license from BMW to manufacture their
vehicles. In 2022 the company decided to do away with internal combustion
engine autos in favor of electric cars. VinFast’s electric cars didn’t
completely make the running (and raised some regulatory questions).
Nonetheless, on August 15, the company went public via SPAC merger, and its
stock belongs to the trendiest in the market.
By the
way, if you want to find trendy or promising shares easily, you can use stock
screener. This tool generates lists of stocks to match your
criteria.
But
let’s get back to VinFast and its shares. Since the IPO, they have been
extremely volatile. One might say that it’s pretty typical. An IPO, electric
vehicles, hyped brand name – these are all core elements of a trader’s starter
pack. But a little-known Vietnamese company that managed to become the world’s
third-largest carmaker by market cap for no clear reason is not a common case.
Just take a look at the chart (disclaimer: the situation might change fast;
therefore, we can’t guarantee that you are not witnessing VinFast’s stock steep
drop right now).
Could
there be some hidden drivers pushing stocks to new heights? Well, one of the
possible reasons is that the company is building a factory in North Carolina.
Moreover, VinFast’s magnet supplier, Star Group, is planning to invest in a new
plant in Vietnam. On top of that, the Vietnamese market could become an
interesting alternative to the Chinese car market.
All
that’s been said is nice. But, honestly, these drivers don’t seem to justify a
$160-mln market capitalization. Simultaneously, VinFast reported losses
exceeding $2 billion last year. In 2023, the carmaker is aiming to sell about
50,000 vehicles. For comparison, Tesla’s plan is nearly 1.8 million vehicles.
And don’t forget that the economic situation worldwide is indisposed to the
growth in car sales.
In other
words, there is almost no obvious explanation for the current VinFast stock
price. EV makers are gearing up for the future, and VinFast may become one of
the symbols of that future, who knows. But right now, it’s more of a story
about highly volatile stock, where investing and trading might come with a fair
share of risks. As you understand, it means potential profits and potential
losses are of the same probability.
So, be
careful and conduct your thorough analysis before making deals with VinFast
stock. Just as you would with any other ones.