(News Bulletin 247) – The Vietnamese group had a bewildering first session before falling back on Wednesday. But at more than $70 billion, the company’s market capitalization exceeds that of most of the big names in the sector with the exception of Tesla and Porsche.

It is certainly the big IPO of this month of August: the Vietnamese car manufacturer VinFast, specializing in electric vehicles.

The group made its debut on the Nasdaq on Tuesday via a merger with a SPAC, a listed empty shell whose goal is to buy a company to facilitate its IPO by taking advantage of a more flexible regulatory framework.

The stock closed Tuesday at $37.06, a jump of 68% from the opening price of $22. The title then dropped 18.75% on Wednesday, suffering like all technology groups – which are sometimes associated with electric vehicle specialists – from the rise in bond rates, itself triggered by the report of the last Federal Reserve (Fed) meeting.

Nevertheless, Vinfast’s market capitalization remains at a relatively impressive $72.7 billion according to investing.com.

A limited float

This allows the Vietnamese group to eclipse the major American automotive groups, such as GM (48 billion dollars), Ford (46 billion dollars) or even Stellantis (58 billion).

In reality, only a handful of manufacturers are currently ahead of VinFast: Tesla, of course, with its approximately 739 billion dollars, but also the Chinese BYD (93 billion dollars), as well as the luxury/premium groups Porsche (94 billion euros or 102 billion dollars) and Mercedes Benz (73 billion euros or 79 billion dollars) as well as the Japanese group Toyota (224 billion dollars).

Remember, however, that with 1.3 million shares in circulation, according to Bloomberg, VinFast remains a company with a very limited free float, which translates into very high stock market volatility. According to Bloomberg, Pham Nhat Vuong, the richest Vietnamese in the world, owns 99% of the capital of the company, thanks in part to shares held by his wife as well as through his Vingroup group. In other words, investors have very little access to the capital of the company.

All this while VinFast, established in 2017, has not made a profit so far, according to CNBC.

According to the Wall Street Journal, VinFast sold 11,300 electric vehicles in the first six months of the year, mostly in Vietnam, and is aiming for a figure of 50,000 for the whole of 2023.

The group hopes to find a place in the sun in the United States via cheaper prices than Tesla. With this in mind, it is building a factory in North Carolina which should produce 150,000 vehicles per year from 2025.

A difficult fate for the electrical manufacturers who merged with SPACs

However, the first deliveries of its electric vehicles in the United States had to be postponed at the start of the year due to a software update.

“VinFast’s American ambitions are aggressive for a company that does not have a recognized brand or a particularly distinctive product,” he added. Wall Street Journal.

For the time being, according to information from Reuters, the group had sold only 137 copies of its VF8 model in the United States at the end of July.

Recall that several manufacturers of electric cars that had entered Wall Street via a merger with a SPAC have since foundered. Arrived on the stock market in July 2021, Lucid had started at 23.7 dollars, before climbing to 55 dollars to now fall to 6.37 dollars. For Nikola, who debuted on the stock market in June 2020, the fall was even more violent. Attacked by an activist fund, Hindenburg, who had accused it of having lied about its technologies and its performance, the group saw its share price drop from 66 dollars in June 2020 to now less than 2 dollars. At the end of 2021, the American stock market policeman, the Securities and Exchange Commission (SEC), had sentenced Nikola to a fine of 125 million dollars for having deceived investors.