VinFast circus continues, stock rallies after last night’s 45% drop
Published: 06:29 30 Aug 2023 EDT
VinFast Auto Ltd (NASDAQ:VFS) continues to give investors a rapid and volatile ride, with more whipsaw trading in the past 24 hours.
The Vietnamese electric vehicle start-up that shot to prominence last week with its somewhat giddy Nasdaq float, finished Tuesday down 45% to close at $46.25 but is trading at $49.50 in early premarket deals with a 7% rally.
It has in its short two-week history on Nasdaq, the stock traded as high as $82.35 and as low as $15.40. The SPAC deal that brought it to market was, meanwhile, priced at $10.00.
VinFast found itself as a ‘top three’ car maker shortly after the Nasdaq float, on market cap metrics alone, priced above traditional industry giants General Motors and Ford, and, even many of the new generation EV players like Rivian and Lucid.
Operationally, the Vietnamese firm does not have the same scale – it has shipped around 3,000 EVs in America and last year had $633 million in revenue.
The anomalous trading seen in the past week is the result of stock market microeconomics, more so than its business credentials.
VinFast came to market via what’s termed a “deSPAC” deal, in which a private company merges with an existing public shell company that was formed as a SPAC – no new funds are raised, rather the incoming company simply picks up the listing and the existing shell. It is, essentially, the ‘opposite’ of a SPAC deal which typically sees investors put in placeholder investors before a larger raise once an acquisition is lined up.
What ensued since VinFast executed its deSPAC deal, is that the EV firm’s stock has been in acutely short supply.
Without an influx of extra equity, as would happen in a regular SPAC situation, VinFast began trading with a tiny free float of around 1.3 million shares.
Meanwhile, Vietnam’s wealthiest man Pham Nhat Vuong controls around 99% of the stock.
Given the incredibly tightly market in the shares and the meme-like buzz the stock established in September, evidently, the VinFast stock circus will stay in town for some time longer.
In New York, the stock is up $3.38 or 7.3% in Wednesday’s early deals.
