VFS price increased by more than 30% to over 49 USD, bringing VinFast's capitalization to surpass BYD and causing US short sellers to call this a "crazy valuation".
VinFast's VFS shares on the Nasdaq have had recent trading sessions with large amplitudes.
After a record debut at $37, VFS shares fell for three consecutive sessions, losing nearly 60% of their market value, falling back to $15. VFS returned to green from the session on August 21 when it rose back to $17.58 and began to become the center of attention. VFS shares fluctuated with an amplitude that sometimes reached three digits. Shares of the Vietnamese electric vehicle company closed at $49 on August 24.
This price makes VinFast the electric car company with the second highest market capitalization, just behind Tesla and surpassing a series of other names such as BYD, Rivian, Lucid Motors.
According to Bloomberg Billionaires Index , Vingroup Chairman Pham Nhat Vuong's assets increased to 56.3 billion USD as of the end of the trading session on August 24, approaching the group of 20 richest billionaires in the world. Meanwhile, Forbes determined Mr. Vuong's assets at 41.4 billion USD, ranking 28th in the world.
Market capitalization is the value of the total number of outstanding shares of a company listed on the stock exchange. High or low capitalization depends on the number of outstanding shares and their market price.
The concentrated shareholder structure with low free-float is the main reason for the strong fluctuations in VFS shares. The number of shares held by a group of companies related to Vingroup and Chairman Pham Nhat Vuong accounts for more than 99% of the total issued shares of VinFast Auto, according to the prospectus. The number of free-float shares after VinFast is listed is only about 4.5 million shares out of a total of more than 2.3 billion shares.
The recent volatility of VinFast shares has also surprised US analysts. According to Bloomberg , famous short seller Jim Chanos called VinFast's stock valuation "crazy".
However, short selling - a way of trading to profit when a stock is overvalued - is not encouraged by analysts for VinFast because it is too expensive.
"Shorting stocks may seem reasonable at first glance, but we think at this point, it is not the best trading strategy," said Tyler Manh Dung Nguyen of Maybank.
Because the float is so low, the cost of borrowing shares to short VinFast is in the triple digits, or an interest rate of more than 100% per year. The very small float and lack of large institutional investors means that the supply for potential short sellers is “very tight,” according to Matthew Unterman, a director at S3 Partners.
VinFast listed in the US via SPAC . Other recent SPAC deals have seen initial booms followed by sharp declines as traders sought quick profits on high volatility. Lordstown Motors, Nikola and Faraday Future Intelligent Electric — startups — have all lost more than 90% of their market value since their mergers.
Since its founding in 2017, VinFast has yet to break even. Vietnam’s largest electric vehicle maker recorded revenue of nearly VND15 trillion ($660 million) in 2022 and nearly VND2 trillion ($86 million) in the first three months of this year, according to a prospectus filed with the US Securities and Exchange Commission.
However, VinFast suffered a pre-tax loss of more than VND48,900 billion last year and an additional VND14,100 billion in the first quarter of this year. By the end of the first quarter, VinFast's total assets reached nearly USD5.1 billion, of which investments in factories, machinery and equipment were more than USD2.6 billion. The total accumulated loss recorded by the end of the first quarter was nearly USD6 billion.
Minh Son
Vnexpress.net
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