VinFast stock price tumbled to a record low as concerns about the electric vehicle (EV) industry accelerated. It plunged to a low of $4.53 on Wednesday, giving it a market cap of $11 billion. That is a much deeper crash for a company that was worth over $80 billion a few months ago. 

VinFast’s stock performance is in line with that of other American and Asian EV companies. Tesla shares have crashed by more than 30% this year and analysts expect it to continue falling. In a note this week, analysts at JP Morgan slashed their estimate to $115, much lower than the current $167. 

Other EV companies are in trouble too. Fisker is considering filing for bankruptcy while Canoo has issued a going concern warning. Faraday Future is running out of money amid low demand for its luxury vehicles.

Meanwhile, stocks of most companies like Nio, BYD, Li Auto, and Xpeng have all slumped hard this year. The main concern is that these firms are overproducing, a situation that will ultimately lead to low margins.

VinFast is under more pressure because of the relatively negative reviews its vehicles have received in the United States. In March, the company said that it would recall almost 6,000 vehicles. At the same time, VinFast needs more money to build its American plant. 

VinFast’s business is growing. The most recent financial results showed that the company sold over 13,500 vehicles in the fourth quarter and more than 34,000 in the full year. It now expects to supercharge this growth by making 400,000 vehicles in 2024.

Its financial results revealed that its revenue rose by 26% YoY to $437 million while its full-year figure jumped to $1.19 billion. It also spent over $250 million in capital expenditure, especially in its North Carolina plant. 

The main concern for VinFast is that the EV industry is going through a slowdown that could hurt its future sales. We have already seen with the weak delivery numbers by the likes of Rivian, Tesla, and Lucid Group.

The other concern is that the company will need to raise additional capital, which will lead to more dilution. VinFast diluted its shareholders last week when it sold 5.1 million shares to fund its development.

Finally, there is the valuation aspect considering that this is an $11 billion company. This means that investors are valuing it more than Rivian, a well-known brand that has more room to grow internationally.

By Crispus Kanyaru

With a keen eye for market trends and a knack for translating complex financial concepts into engaging narratives, Crispus has established himself as a trusted voice in the world of finance. His work has graced the pages of esteemed publications like Benzinga, Forbes, Invezz, and Banklesstimes, reaching a diverse audience eager to navigate the ever-evolving financial landscape. Crispus's journey began with a deep curiosity about the forces shaping the global economy. This natural inquisitiveness led them to pursue a degree in finance and CPIA, equipping them with a solid foundation in financial theory and analysis. But Crispus knew that knowledge alone wasn't enough. He craved to bridge the gap between dry data and real-world experiences, to make finance accessible and relatable to everyone.

Leave a Reply

Your email address will not be published. Required fields are marked *