LONDON: In a stunning display of market enthusiasm, Vietnamese electric vehicle (EV) manufacturer VinFast has made a remarkable entrance to the global stage.
On its inaugural day of trading on the renowned New York Nasdaq exchange, the company’s shares witnessed an astronomical surge of 255%. This surge, though impressive, is particularly noteworthy as VinFast has yet to secure profitability. Nevertheless, this remarkable market debut has propelled VinFast’s stock market valuation to an impressive $85 billion (£67 billion), catapulting it far beyond the valuations of industry giants Ford ($48 billion) and General Motors (GM) ($46 billion).
VinFast’s impressive market entrance unfolds against the backdrop of fierce competition in the automotive sector, where both the established giants and emerging manufacturers are vying for their slice of the burgeoning EV market. With climate concerns, advancing technology, and shifting consumer preferences driving the EV revolution, VinFast’s surge underscores the growing investor faith in the electric vehicle sector.
This milestone also witnessed an infusion of approximately $39 billion into the personal wealth of VinFast’s founder and chairman, Pham Nhat Vuong. Already acknowledged as Vietnam’s wealthiest individual, Vuong’s control of 99% of the company’s outstanding shares, primarily through Vietnam’s largest conglomerate, Vingroup JSC, reinforces his substantial influence over VinFast’s trajectory. However, this concentrated control has a dual effect: while it strengthens Vuong’s hold over the company, it also creates a scarcity of shares available for trading, which can contribute to significant price fluctuations.
During the initial trading day, VinFast experienced relatively moderate trading activity, with approximately $185 million worth of shares changing hands. Bill Russo, the Founder and CEO of Shanghai-based Automobility, highlights the investor belief that an electric-focused future favours an emerging East Asian country, namely Vietnam, over China. This demonstrates the market’s anticipation of Vietnam’s potential to become a formidable competitor in the US electric vehicle market.
Interestingly, VinFast’s path to going public deviates from the conventional approach. The company opted to go public by merging with a shell company, or special purpose acquisition company (SPAC). Such a strategy is commonly used by startups to expedite the process of taking a private company public. VinFast’s use of this approach isn’t entirely unprecedented, as several other EV manufacturers, including Lordstown Motors and Faraday Future, have employed SPACs in recent years. Nonetheless, VinFast’s trajectory may be different due to its backing by Vingroup, a business entity with a proven track record of growth and financial stability.
Notably, VinFast faces fierce competition from established players striving for dominance in the EV market. Market leaders such as Tesla, spearheaded by Elon Musk, and BYD, supported by veteran investor Warren Buffett, have been slashing prices to stimulate sales. In the first half of the year, VinFast delivered around 11,300 EVs, as indicated by a company presentation. To provide context, Tesla managed to deliver over 889,000 vehicles during the same period.
Although Tesla remains the undisputed frontrunner in the EV domain, industry experts acknowledge that there’s room for multiple successes. Dan Ives from Wedbush Securities emphasizes that VinFast has laid a solid foundation for EV triumph. While the path ahead is laden with competition and challenges, VinFast’s groundbreaking market debut has ignited both investor excitement and hopes for its burgeoning EV journey.
