VinFast's market capitalization exceeds $100 billion.

VinFast 's share price surged by over 30% to more than $49, pushing its market capitalization past BYD and prompting US short sellers to call it a "crazy valuation."

VinFast's VFS shares on the Nasdaq have experienced large price swings in recent trading sessions.

After a record-breaking debut of $37, VFS shares fell for three consecutive sessions, losing nearly 60% of their market value, dropping to around $15. The stock rebounded on August 21st, rising to $17.58 and becoming the focus of attention. VFS shares fluctuated with price swings reaching triple digits at times. The Vietnamese electric vehicle company's stock closed at $49 on August 24th.

This price makes VinFast the second-largest electric vehicle manufacturer by market capitalization, after Tesla, and surpassing a number of other big names such as BYD, Rivian, and Lucid Motors.

According to the Bloomberg Billionaires Index , Vingroup Chairman Pham Nhat Vuong's net worth increased to $56.3 billion by the end of trading on August 24, approaching the group of the world's 20 richest billionaires. Meanwhile, Forbes identifies Mr. Vuong's net worth at $41.4 billion, ranking him 28th globally .

Market capitalization is the value of the total number of outstanding shares of a company listed on the stock exchange. Whether market capitalization is high or low depends on the number of outstanding shares and their market price.

The concentrated shareholder structure with a low number of free-float shares is the main reason for the high volatility of VFS shares. According to the prospectus, the shares held by companies related to Vingroup and Chairman Pham Nhat Vuong account for over 99% of the total issued shares of VinFast Auto. The number of freely traded shares after VinFast's listing is only about 4.5 million out of a total of over 2.3 billion shares.

The recent volatility of VinFast's stock has also surprised American analysts. According to Bloomberg , renowned short seller Jim Chanos called VinFast's valuation "crazy."

However, short selling – a trading method used to profit from the belief that a stock is overvalued – is not recommended for VinFast by analysts because it is too expensive.

"Short selling stocks might seem logical at first glance, but we think it's not the best trading strategy at this time," said Tyler Manh Dung Nguyen of Maybank.

Due to the extremely low amount of floating shares, the cost of borrowing shares to short VinFast has reached triple digits, meaning interest rates exceeding 100% per year. According to Matthew Unterman, director of S3 Partners, the very small floating ratio and the lack of participation from large institutional investors mean that the supply for potential short sellers is "very scarce".

VinFast is listing in the US through a SPAC (Stock Company Partnership) . Other recent SPAC-related transactions have experienced initial explosive trading sessions followed by sharp declines as traders sought quick profits due to high volatility. Lordstown Motors, Nikola, and Faraday Future Intelligent Electric – these startups – have all seen their market capitalization drop by more than 90% since their mergers.

Since its establishment in 2017, VinFast has yet to reach the break-even point. Vietnam's largest electric vehicle manufacturer recorded revenue of nearly VND 15 trillion in 2022 and nearly VND 2 trillion in the first three months of this year, according to its prospectus submitted to the U.S. Securities and Exchange Commission.

However, VinFast incurred a pre-tax loss of over VND 48,900 billion last year and an additional loss of over VND 14,100 billion in the first quarter of this year. As of the end of the first quarter, VinFast's total assets reached nearly USD 5.1 billion, of which investments in factories, machinery, and equipment amounted to over USD 2.6 billion. The total accumulated loss recorded as of the end of the first quarter was nearly USD 6 billion.

Minh Son

Vnexpress.net