VinFast Auto Ltd made a successful NASDAQ debut on Tuesday, highlighting the growing interest in and uptake of electric vehicles.
The Vietnamese electric vehicle maker’s stock opened at US$22, more than double the US$10 per share agreed with its special purpose acquisition company (SPAC) partner Black Spade Acquisition.
The opening price valued VinFast at US$23 billion, with the company saying it was likely to raise money from global investors within 18 months.
VinFast’s market launch got even better during the day, with shares during the session ending at US$37.06 and valuing the yet to make a profit EV maker, at US$85 billion.
That current valuation is more than Ford's market capitalisation of US$48 billion and General Motors (NYSE:GM)' US$46 billion stock market value.
Refinitiv data shows about US$185 million worth of the company's shares were exchanged.
Taking on Tesla (NASDAQ:TSLA)
VinFast CEO Le Thi Thu Thuy has his eye on overseas markets. The company will switch its Tesla-inspired direct-to-consumer distribution model and target dealers in overseas markets.
"We are switching to a hybrid model where we have our own showrooms as well as talking to dealers to open dealer showrooms," Thuy told Reuters.
The company’s position was made possible, following its merger with Black Spade. It now has a US$4 billion factory under construction and a new approach to sales to bring in dealers.
"The street has all its eyes on the leaders in this next frontier with many winners, along with Tesla, in this green EV tidal wave playing out for the coming years," Wedbush Securities analyst Dan Ives said.
VinFast expands amid challenges: A look at the EV maker's journey
VinFast is an arm of Vietnam's most prominent conglomerate, Vingroup, which has seen significant investments in its operations. According to a filing in June, Vingroup, alongside its affiliates and the group's founder, Vuong, invested a staggering US$9.3 billion in the EV venture.
To further boost the company's financial standing, Vuong personally committed US$1 billion out of a total US$2.5 billion pledge made in April.
However, despite the influx of capital, the firm faced financial hurdles. Reporting a sharp 49% decrease in its first-quarter revenue compared to the previous year, VinFast also noted a net loss of US$598 million. By the end of 2022, the company's losses had reached US$2.1 billion.
In a strategic move to mark its footprint in the US, VinFast has initiated the construction of a US$4 billion production facility in North Carolina. This expansion comes at a time when the EV market, dominated by Tesla and buoyed by various Chinese competitors, is experiencing pricing tensions.
For potential consumers in California, the starting price of VinFast's VF8 is set at US$46,000. In comparison, the Tesla Model Y is priced slightly higher at US$47,740, although a US$7,500 federal tax credit is available for the latter.
Thuy highlighted the company's strategy, remarking on its ambitions for "cost reduction in the future". In addition, Thuy shed light on the company's plans to introduce its larger VF9 EV model to the American audience by the year's end. Concurrently, VinFast is diligently working to secure certifications from Europe's safety regulatory body for its vehicle lineup.
Net worth soars
The surge in VinFast’s shares on Tuesday added US$39 billion ($60 billion) to the net worth of chairman Pham Nhat Vuong, whose fortune now stands at US$44.3 billion, according to the Bloomberg Billionaires Index.
Vuong is Vietnam’s richest man.
Previously, the index did not account for his significant share in VinFast, the car company he founded. He holds a commanding 99% of the company's outstanding shares, both directly and indirectly, primarily via his conglomerate, Vingroup.
This concentration of ownership restricts the number of shares available for general trade, leading to potential volatility in the company’s share price.
In a change of strategy, VinFast decided against a traditional initial public offering (IPO). The decision came after a noted decline in investor interest for start-ups posting losses. Instead, VinFast chose to merge with Black Spade Acquisition, an entity established by casino entrepreneur Lawrence Ho.
Recent mergers with SPACs have seen sharp stock price fluctuations, often peaking shortly after the merger's completion, primarily due to traders capitalising on companies with limited share availability. Thus, the current boost in Vuong's net worth might be transient.
VinFast, founded by Vuong in 2017, anticipates its sales to land between 45,000 and 50,000 units this year. The company has benefited from an investment of at least US$300 million, contributed by Vuong and his family.
Vuong's entrepreneurial journey traces back to his move to Ukraine in the 1990s after his geoeconomics engineering studies in Russia. He ventured into the instant noodles business, which he later sold to Nestle in 2010, almost a decade after relocating to Vietnam.
By then, he had already founded Vingroup JSC, a publicly traded entity with interests in real estate, resorts, education and retail. Last year, the Hanoi-based conglomerate reported revenues of US$4.4 billion and continues to be a key stakeholder in VinFast.
It remains to be seen if VinFast will sustain its market gains, especially considering the market setbacks faced by other electric vehicle firms that went public via SPACs, such as Lordstown Motors, Nikola and Faraday Future Intelligent Electric. These companies experienced significant market value losses following their respective mergers.