It’s been a big week for VinFast, which offered traders their first chance to invest in it after going public on Tuesday. Its share prices quickly shot up, and trading suggested that it was more valuable than Ford and General Motors combined. Today, its shares are already worth nearly two thirds less than they were at their peak.
At its height, VinFast’s shares were trading at $38.78, up from their starting value of $22. However, now the automaker’s stock is trading at just $13.94, meaning that it is valued at $32.4 billion, down from $85 billion for its Wall Street debut four days ago.
While the degree to which the automaker’s shares are changing is noteworthy, it isn’t surprising, reports Reuters. Since the company’s founder, Pham Nhat Vuong, controls around 99 percent of the company, the small amount of stock available for public trading opens it to volatility.
More: Wall Street Thinks VinFast Is Somehow Valued As Much As GM And Ford Combined
Meanwhile, there is evidence to suggest that the price will continue to fall, reports Barrons. VinFast is likely to need more capital, which will probably result in more shares being issued, diluting the value of existing stock.
It’s also not clear that VinFast will be able to hit the sales and profit milestones that warranted its enormous surge in value. Moreover, although the company has proven that it can sell vehicles in Vietnam, it has had a harder time in the U.S., where criticism of the electric vehicles it produces has been harsh.
In addition, like many other EV startups, VinFast isn’t profitable yet. It lost about $600 million in the first quarter of 2023, after spending more than $1 billion trying to build its business in markets around the world.
All of which suggests that, like Rivian, despite early optimism, share prices are likely to continue shrinking over the coming weeks and months.
