The wild ride of Vietnamese electric vehicle (EV) maker VinFast Auto (NASDAQ:VFS) continued as investors made it the third most valuable global automaker.
VinFast, which launched through a special purpose acquisition company (SPAC) on Aug. 15, rose 40% on Aug. 25 and another 10% over the weekend, bringing its market capitalization to nearly $175 billion. That put its value behind only Tesla (NASDAQ:TSLA) and Toyota Motor (NYSE:TM) among the world’s automakers before it even scales production.
VFS stock opened this morning at about $79 per share.
Move VinFast and Break Things
Some reporters are comparing VinFast’s fast launch to those of Rivian (NASDAQ:RIVN) and Lucid (NASDAQ:LCID). Others are comparing its market cap to those of other carmakers.
But there’s another comparison to be made.
VinFast sponsor Black Spade was put together by Lawrence Ho, a Hong Kong investment banker and son of a Chinese casino owner. The early action in the stock is reminding some of last year’s mania for AMTD Digital (NYSE:HKD) stock, which jumped to $485 per share after coming public last year. HKD stock is currently trading at about $6/share.
While VinFast lists 2.32 billion shares outstanding, its float is just 7.32 million shares. This means the price can be very volatile even when few shares trade. Some brokers, possibly in East Asia, may be taking advantage of this, as they did with AMTD.
Some analysts are telling investors to sell VFS stock based on its fundamentals. The company failed to make gas-driven cars in the last decade, and its VF8 got a poor review from Motor Trend. Car and Driver also turned thumbs down on a VF8 they were given to test.
After a bumpy ride with its direct-to-consumer model, VinFast is now considering selling through established auto dealers.
VFS Stock: What Happens Next?
The excitement over VFS stock has nothing to do with fundamentals and little to do with the cars. It’s yet another case of East Asian stock mania and likely to go the way of the others. Speculators should be aware the bubble could pop at any moment.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
