VinFast’s Meteoric Rise Sparks Fears of a Bubble Burst


The Vietnamese electric-vehicle startup VinFast Auto Ltd. has become the world’s hottest stock, surging 688% since its debut in a SPAC listing on Aug. 15. The company’s market capitalization is now $190 billion, surpassing half of the companies in the Dow Jones Industrial Average, including Goldman Sachs Group Inc. and Walt Disney Co.


What is VinFast and why is it so popular?

VinFast is a subsidiary of Vingroup, Vietnam’s largest conglomerate, which has interests in real estate, retail, hospitality, education, health care, and technology. VinFast was founded in 2017 as a car manufacturer, and launched its first vehicles in 2019. The company aims to become a global leader in electric vehicles, with plans to produce 500,000 units per year by 2025 and export to Europe and North America.

VinFast’s popularity among investors stems from several factors, such as:

  • Its strong backing from Vingroup, which has a reputation for quality and innovation in Vietnam.
  • Its ambitious vision to challenge established players like Tesla and Toyota in the fast-growing EV market.
  • Its attractive design and features, such as smart technology, wireless charging, and autonomous driving.
  • Its low valuation compared to its peers, as it was priced at only $15 per share in its SPAC merger with Giga Energy Inc., a blank-check company backed by billionaire investor Chamath Palihapatiya.

How does VinFast compare to Tesla and other EV makers?

VinFast’s valuation of $190 billion makes it the third most valuable car company in the world, after Tesla ($750 billion) and Toyota ($250 billion). However, unlike these giants, VinFast is still unprofitable and has not sold any EVs yet. The company expects to deliver its first EVs in Vietnam by the end of this year, and in Europe and North America by 2022.

VinFast’s revenue in 2020 was only $108 million, mostly from selling gasoline-powered cars and motorcycles. The company reported a net loss of $284 million for the same year. In contrast, Tesla’s revenue in 2020 was $31.5 billion, with a net income of $721 million. Toyota’s revenue in 2020 was $256 billion, with a net income of $21.1 billion.

VinFast’s production capacity is also much lower than its rivals. The company has one factory in Vietnam that can produce up to 250,000 vehicles per year. Tesla has four factories in the US, China, Germany, and Japan that can produce up to 1.5 million vehicles per year. Toyota has more than 50 factories around the world that can produce up to 10 million vehicles per year.

Is VinFast a bubble waiting to burst?

Some analysts and investors have raised concerns that VinFast’s stock price is driven by hype and speculation rather than fundamentals. They point out that the company faces many challenges and risks, such as:

  • The uncertainty of the EV market demand and competition, especially in emerging markets like Vietnam where infrastructure and consumer preferences are still developing.
  • The high costs and complexity of developing and manufacturing EVs, which require advanced technology, engineering, supply chain management, and quality control.
  • The regulatory and legal hurdles that may affect the company’s ability to operate and expand in different countries and regions.
  • The lack of liquidity and transparency of the company’s shares, which are thinly traded and hard to short. Less than 1% of its shares are available for trading, making it expensive for short sellers to borrow.

The last time a stock with a tiny free float rose from relative obscurity to the ranks of the world’s largest companies, it didn’t end well for investors. AMTD Digital Inc., another US-listed company with roots in Asia, baffled market veterans a year ago by soaring more than 32,000% in the span of a few weeks. The money-losing financial services company’s paper value at one point reached over $400 billion, exceeding that of JPMorgan Chase & Co. AMTD has since tumbled more than 99%, hitting a record low last week. Its valuation now stands at a humble $1.2 billion.

Some analysts have compared VinFast to AMTD Digital Inc., warning that the Vietnamese EV maker could suffer a similar fate if it fails to deliver on its promises and expectations.

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