VinFast shares increase dramatically, why did billionaire Pham Nhat Vuong's assets fluctuate by billions of dollars?

Shock increase, deep decrease

VinFast shares increased sharply in the first trading session on August 15, surprising not only domestic and international investors, but also insiders who found it difficult to imagine such a result.

In the first trading session on the US stock market, VinFast shares closed at over 37 USD, more than 3 times higher than the reference price, thereby bringing VinFast's capitalization to 85 billion USD, surpassing Mercedes-Benz, Ford, General Motors and many famous car manufacturers.

In an online press conference right after the IPO, VinFast CEO Le Thi Thu Thuy admitted that she was "surprised" when the stock price rose to 37 USD during the IPO and was not prepared for the scenario of VFS shares reaching this price.

Previously, according to Ms. Thuy, when asking investment banks, most of them said that the stock would be red, meaning that VFS would fall below 10 USD/share in the first session. VinFast leaders and associates initially believed that it would reach a capitalization of over 23 billion USD, "but did not expect 85 billion USD".

In the first trading session, a total of 6.7 million VFS shares were transferred, worth about 200 million USD. The number of shares traded was higher than the total free float of 4.5 million units.

VinFast stock price fluctuations in the first two trading sessions on the US Nasdaq stock exchange. (Source: YHF)

However, in the second session on August 16, the selling pressure was relatively strong. At one point, VFS fell 45% to nearly 25 USD/share (compared to the closing price of 37.06 USD/share in the first session), then immediately recovered and reached the threshold of 30.11 USD/share.

During the session, there was a time when VinFast's capitalization evaporated by 25 billion USD and the total value of the second session was pulled back, the decrease was 16 billion USD. VFS's capitalization was 69 billion USD. During this session, 2.8 million shares were traded.

Despite the decline, VinFast's capitalization is still very large, still in the Top 3 largest electric car companies in the world.

The strong fluctuations in VFS shares also caused billionaire Pham Nhat Vuong's assets to fluctuate continuously.

However, according to the latest ranking by Forbes, the richest businessman in Vietnam has seen his assets skyrocket compared to a few days ago, to 37.5 billion USD, ranking 33rd on the list of the richest people on the planet, above billionaire Jeff Bezos' ex-wife, Ms. MacKenzie Scott (ranked 36th) and equal to billionaire Li Ka-shing, a famous businessman from Hong Kong.

Why?

The fact that VFS shares have increased dramatically and reached a capitalization of 85 billion USD is not really surprising, in the context that the valuation of this enterprise is already at a high level of 23 billion USD. The listing of a technology company, especially an electric car company, usually attracts a lot of attention.

Historically, there have been many electric car companies that have seen their stock prices increase sharply as soon as they are listed on international exchanges.

According to Reuters, electric car stocks such as Nikola Corp or Lucid saw their prices increase sharply and then fall after listing through SPAC - a form of back door listing, or reverse merger.

Nikola's market capitalization has dropped from $13.9 billion before listing to $1.4 billion, while Lucid's has dropped from $24 billion in 2021 to $15.5 billion now.

With VinFast, the number of free float shares is quite low, only 4.5 million units, compared to the scale of more than 2.3 billion shares.

In the first trading session, a total of 6.7 million VFS shares were transferred, higher than the total number of shares in free circulation. This shows that there is buying and selling on the trading market with T+0 time.

Assuming a 3-round rotation, the actual transaction in the first session on August 15 was only about 2.2 million shares, equivalent to 0.1% of VFS shares and corresponding to half of the shares held by Black Spade's founding shareholders.

The number of shares available for trading compared to the total number of outstanding shares is too different, while demand is high. This is a factor that pushes prices up.

However, the strong increase in stock prices in the first session also caused high demand for profit-taking.

Given the current developments, it may take more time to determine a more balanced price for VinFast shares as well as the company's capitalization. The fluctuations will become more accurate when the free float ratio is higher.

A free float of less than 1% is too small. If 100% of stocks were freely traded, the situation could be very different. The current low free float also makes it possible for those who want to short (sell) to lose money.

In the coming time, a new amount of shares may be released, including several million shares transferred from the partner's warrants in the next few months, the supply of VFS in the market will be larger. Price fluctuations will be more accurate.

However, in general, with a scale of several million to several tens of million shares compared to the total of more than 2.3 billion shares, the situation may not change much. The control of supply is still in the hands of billionaire Pham Nhat Vuong.

VinFast CEO Le Thi Thu Thuy also affirmed that VinFast will not stop at listing, but the stock exchange is to mobilize large amounts of capital, not for marketing.

However, the capital mobilization roadmap will not be urgent because VinFast's capital pressure is not high as the company has just received a commitment of funding and lending of 2.5 billion USD from Vingroup and billionaire Pham Nhat Vuong.

Billionaire Pham Nhat Vuong is among the world's richest people: Rankings change constantly Billionaire Pham Nhat Vuong entered the top 50 richest people in the world just one day after VinFast shares were listed on the US stock exchange. However, Mr. Vuong's position changed very quickly according to the fluctuations of VFS shares.

Forbes update: Mr. Pham Nhat Vuong has 37.5 billion USD, ranked 33rd in the world, number 1 in Southeast Asia . Both Forbes and Bloomberg have had relatively close assessments of billionaire Pham Nhat Vuong's assets after the fluctuations when the car company VinFast listed its shares on the US stock exchange.

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