Electric-vehicle (EV) sentiment among investors is experiencing a significant decline due to disappointing earnings and slowing growth. Over the past few weeks, EV shares have been battered, with several notable EV start-ups witnessing a decline in their stock prices. However, amidst this downturn, Vietnamese EV start-up VinFast Auto (ticker: VFS) seems to be defying the odds as its shares surge by 13% in midday trading, reaching $6.96. Meanwhile, broader market indices S&P 500 and Nasdaq Composite are both down around 0.3%.
Struggling Competitors, Surging VinFast
While other EV start-ups like Fisker (FSR), Rivian Automotive (RIVN), and Lucid (LCID) are grappling with declining stock values, VinFast is proudly bucking the trend. Despite Rivian increasing its production guidance and Lucid cutting production expectations, investors remain unimpressed and continue to sell their shares. Similarly, Fisker has faced delays in reporting third-quarter numbers due to the change in its chief accounting officers, leading to further stock sell-offs.
Tesla's Stoic Performance
Even the EV industry's stalwart leader, Tesla (TSLA), is not immune to the market downturn. Tesla's stock witnessed a 1.2% decline in midday trading, reflecting the challenging situation faced by all EV manufacturers.
The Mystery Behind VinFast's Rise
Surprisingly, there doesn't seem to be an apparent reason behind VinFast's soaring stock price. The company has not released any financial numbers or issued any news releases, and there is no coverage of the stock from Wall Street analysts.
Optimistic Analysts Support VinFast
Since merging with a special purpose acquisition company (SPAC) in August, VinFast has garnered two analyst ratings, both of which are Buy recommendations. The average analyst price target for VinFast stock stands at $9, with one analyst even setting an ambitious price target of $11. Another analyst has a more conservative price target of $7.
As the overall sentiment surrounding EV manufacturers remains bearish, VinFast's unexpected rise presents an intriguing and mysterious case. Will the momentum continue, or will the broader market sentiment prevail? Only time will reveal the true picture of VinFast's success story.
The Rise and Fall of VinFast Stock
The recent fluctuations in VinFast stock have left investors and traders astounded. Over the past 2½ months, the stock has experienced an incredible range, from $4.59 to $93. This volatility has attracted traders looking for speculative opportunities rather than long-term investment in electric vehicles (EVs). On average, the stock has moved about 15% up or down each day since the completion of the SPAC merger.
Fortunately for VinFast, today is one of those up days. After taking a beating along with other EV stocks, VinFast shares dropped 57% in October. This downward trend was largely influenced by concerns over weak earnings reports from prominent EV manufacturers such as Tesla and Ford Motor (F). In comparison, Tesla stock experienced a decrease of about 20% during the same month. While Tesla shares continue to decline today, they are still up almost 10% for the month.
However, there is hope on the horizon for VinFast. In November, the stock has demonstrated resilience and has already seen a 28% increase in share value. When VinFast stock bounces back, it tends to shoot up significantly higher than its EV counterparts. Conversely, when it falls, it plummets much further. This rollercoaster ride makes VinFast stock an attractive but risky proposition.
Back in mid-August, analysts criticized VinFast stock for being too expensive, with shares priced at around $37. At that time, the stock was valued at a staggering $85 billion, surpassing the combined market caps of both Ford and General Motors (GM). Although shares briefly reached $93 a few days later, they quickly came crashing back down. Currently valued at around $7 per share, VinFast stock still commands a hefty $14 billion market cap. Adjusted for cash and debt, this valuation exceeds that of Rivian.
Despite its lofty price tag, VinFast remains a promising EV start-up. The stock's wild ride continues to captivate traders while generating mounting intrigue in the investment community.
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