2023-08-29 15:07:00
Vietnamese Finfast car
Electric cars
Its value exceeded 200 billion dollars… preceded by “Tesla” and “Toyota” only
Dubai – Al Arabiya.net
Posted on: August 29, 2023: 07:07 PM GST Last updated: August 29, 2023: 07:30 PM GST
The unprofitable electric car maker has suddenly become the world’s third-biggest automaker, overtaking the likes of General Motors and Ford Motor in its dust.
It comes after shares of Vietnamese company VinFast Auto have risen nearly 700% since listing in mid-August – even though it hasn’t made many cars yet, let alone turned a profit.
Here’s how VinFast suddenly became one of the most valuable automakers in the world.
What happened?
On August 15, the non-profit Vietnamese electric car maker VinFast, owned by the country’s richest man, made its debut on the Nasdaq Global Select Market index. It is now valued at just under $200 billion, more than General Motors and Ford combined and only preceded by Tesla and Toyota Motor Corp among automakers.
What is the reason for the high share price?
The biggest reason: scarcity, as only 1% of VinFast shares are available for trading. This means that if the buyer acquires a large enough portion of those few shares, it could have a significant impact on the overall share price. It has also hit the radar of retailers, a group fascinated by electric car makers.
Who owns the other 99%?
Regulatory filings show Pham Nhat Vuong, Vietnam’s richest man, controls 99% of the company’s outstanding shares, in part through shares owned by his wife and conglomerate Vingroup JSC.
not profitable
It’s no surprise for such a young company, especially since making cars is an unusually capital-intensive business, that it isn’t profitable. According to the June regulatory filing, VinFast lost $598.3 million in the three months through March 31, while generating $65.1 million in vehicle sales revenue during the same period.
The company said it expects more operating losses in the near term as it expands vehicle production, builds plants and drives marketing, sales and service efforts.
How many cars did the company actually sell?
VinFast, which began building a plant in North Carolina in July, expects sales to reach 45,000 to 50,000 this year, and Fung expects the company to break even by the end of 2024 and could be profitable after 2025.
To put that number in context, VinFast’s sales forecast in terms of the number of units this year is less than 1% of sales achieved by General Motors in 2022, according to Bloomberg’s calculations.
Is the stock price going up because the cars are amazing?
VinFast itself admits that its VF8 City Edition models “have been the subject of negative press that could negatively affect its brand, consumer confidence and demand for its cars.
Some reviews were scathing – one from May was titled “Back to Sender,” another reviewer said he “drove a VinFast VF8 for the first time and wished he hadn’t.” While auto website Jalopnik said the VF8 had “worst structure”, and difficult to control.
What does a high share price mean for Fong’s wealth?
And for the time being, that made him a richer man, at least on paper. His stake in VinFast was worth about $86.7 billion as of Monday’s close in New York. In addition to the remainder of his wealth, which would have placed him in the top ten of the Bloomberg Billionaires Index for the 500 richest people in the world.
However, due to VinFast’s volatility, the Bloomberg Index currently excludes Fung’s stake in the electric car company from his net worth. This leaves him with a $5 billion fortune made up of his shares in Vingroup JSC.
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