(News Bulletin 247) – The Vietnamese group now weighs more on the stock market than all the other car manufacturers except Tesla and Toyota. This while the company has never generated the slightest profit in its young history.

The fever around Vinfast stock continues. Since its introduction on the Nasdaq on August 15, the action of the Vietnamese car manufacturer has been going through sessions of dizzying volatility. Some examples: -33% on August 17, +109% on August 22 or even +40.35% on Monday. The overall trend is however upwards, and on Tuesday, the electric vehicle specialist added another 19.8%, bringing its price to 82.35 dollars.

In other words, the stock has almost quadrupled from its opening price of $22 on August 15, when Vinfast joined Wall Street in merging with a SPAC, a listed shell company whose aim is to buy a company for facilitate its IPO. As a result, its market capitalization, that is to say the stock market value of all of its shares, explodes. As of Tuesday night, Vinfast was worth around $190 billion on Wall Street, according to investing.com.

This allows the Vietnamese company to become the third most expensive automotive group on the stock market, behind Tesla (757.3 billion dollars in market capitalization) and Toyota (about 221 billion dollars according to our calculations), largely eclipsing all the others. .

Vinfast also weighs more on Wall Street than Goldman Sachs (105 billion) or Boeing (134 billion). If listed in Paris, Vinfast would be the fourth highest market capitalization, behind LVMH, L’Oréal and Hermès.

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Limited float and options

Remember that 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.

Bloomberg also points out that the company has caught the eye of retail investors looking for electric automakers that could jump on the stock market, adding to volatility. In addition, according to the agency, options (derivatives) on the stock began trading on the stock on Monday, giving traders the ability to place bets on the stock with significant leverage (i.e. committing large sums with a reduced starting bet).

Beyond the volatility of the action, this stock market enthusiasm is surprising given the fundamentals of the company. Established in 2017, Vinfast has so far never turned a profit, according to CNBC.

Vinfast’s rise “shows there’s still a lot of turmoil in the market,” Matthew Maley, chief market strategist at Miller Tabak + Co, told Bloomberg.

According to the wall street journalVinfast 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.

Precedents that urge caution

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.

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 said. 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 6.15 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 1.22 dollars. At the end of 2021, the American stock market policeman, the Securities and Exchange Commission (SEC), had condemned Nikola to a fine of 125 million dollars for having deceived investors.