Vietnamese electric automaker VinFast stunned the automotive industry as it officially achieved a $190 billion market valuation on Monday’s close.
For context, VinFast’s global EV sales were only 24,000 in 2022. As for the US market, it only sold 128 VF 8 models through May.
All that considered, some were really surprised with the recent news that its stock hit $82.35 per share. It recorded a notable increase from just $22/share on August 15.
VinFast advances as the third most valuable automaker globally
The significant milestone ultimately advanced the company’s position as the world’s third most valuable automaker after giants Tesla and Toyota.
It is also worth noting that VinFast was the only automaker to match Tesla’s market valuation in June 2020. At that time, the Musk-led company’s stock surged to $1,000+/share for the first time in history.
It is undoubtedly a significant development for the American automaker, considering that its EV sales were only 367,656 units in 2019.
The Tesla Model 3 led the EV market, while the Tesla Model Y was only starting to establish a reputation for American customers. As expected, the electric crossover became extremely popular as it advanced as the world’s top-selling car in the first quarter of this year. The company is also the most valuable automaker now since overthrowing Toyota.
Japanese legacy automaker Toyota was the most valuable automaker worldwide, with over 10 million unit sales in 2019.
Stock volatility
Bloomberg News explained that VinFast stock’s volatility is partly due to the limited shares in the automaker’s float.
For context, VinFast founder Pham Nhat Vuong owns approximately 99% of the automaker’s 2.3 billion stocks.
Therefore, VinFast only trades a tiny fraction (less than 1%) of its total stocks in the public market. In effect, it is easier to adjust the stock upward or downward.
“The next big EV stock may be here, and it could be VinFast, but the company has a lot of work to do before it becomes a household name and a stable investment option in the blossoming EV industry.”
The Motley Fool
Challenges
VinFast would undoubtedly struggle to compete with electric vehicle giants like Tesla in North America.
The Vietnamese automaker’s sales only reached 137 EVs as of June. It set a sales target of 50,000 units by the end of 2023.
In contrast, the Musk-led company expects to sell 1.8 million EVs in the same period. Nonetheless, founder Pham Nhat Vuong remains optimistic that the brand can catch up by 2024.
However, industry analysts worry that VinFast may end up like Rivian, which suffered substantial stock declines after reporting record highs.
See Also:
- VinFast to employ a dealership distribution approach in the US
- VinFast makes Nasdaq debut, valuation tops automotive giants
- VinFast to break ground in its first US factory on July 8
- VinFast launches its Special Aftersales Policy for its global customers
- VinFast recalls first batch of US-shipped EVs over security risks
It would be exciting to see if VinFast can sustain this substantial market valuation. VinFast aims to increase EV sales this year by employing a dealership sales approach rather than the direct-to-consumer model.
The automaker is also developing its first US factory in North Carolina worth $4 billion.
