Just weeks after questions were being raised about its survival, VinFast marked its first day of trading on the Nasdaq exchange with a strong surge in its stock price.
With the stock jumping from a $22-a-share opening price to $37.06 at the end of the day’s trading, the Vietnamese automaker ended the day with a market capitalization of more than $80 billion which, if it holds going forward, would make it worth more — at least in the eyes of investors — than General Motors and Ford, never mind Rivian, another key EV startup.
“It’s a big milestone for us to be listed in the U.S. The listing is going to open access to the capital markets for us in the future,” VinFast CEO Lê Thị Thu Thủy said in an interview on CNBC after ringing the opening bell on the Nasdaq exchange on Tuesday morning.
Setbacks nearly derailed the IPO
In recent weeks there had been plenty of questions about not only how investors would react, but whether VinFast would have a chance to go public this year. The company — which was founded in 2017 — faced a series of setbacks during the first half of the year.
For one thing, there were delays in the delivery of its first model, the VF 8. And that all-electric SUV subsequently received a series of harsh reviews from automotive journalists. Adding to its woes, VinFast suffered worse-than-expected losses during the first quarter.
Then, shareholders at Black Spade Acquisitions agreed to adjust the time frame to complete the proposed SPAC deal that permitted VinFast to get listed on the Nasdaq.
Plowing ahead
But the company plowed ahead, despite those problems. In a key, symbolic move, it broke ground for a $2 billion assembly plant in North Carolina on July 28. Then, last week, the Securities and Exchange Commission approved the deal with Black Spade, a special purpose acquisitions company. That deal finished days later.
But few expected the sort of response VinFast shares — traded under the VFS ticker — would get from investors. The first day proved volatile enough that the exchange briefly halted trading. But, by the close on Tuesday afternoon, the shares had surged to $37.06.
The question is whether, with a market capitalization estimated at more than $79 billion, VinFast can live up to expectations.
What now?
It has so far delivered just over 2,000 cars in the U.S., and a smaller number in Canada. It needs to win back some love from reviewers, but Thuy and other executives have said they will learn from and respond to the criticism the VF 8 has received. They’ll need to prove that quickly.
Among other things, the company continues to promise it will roll out a procession of additional products. The larger, three-row VF 9 is scheduled to reach U.S. showrooms by year-end, with smaller VF 6 and VF 7 EVs to arrive early in 2024.
It will take significantly more sales volume to address the company’s mounting losses.
Breaking ground
The cash raised on Tuesday — Black Spade estimating the listing would generate about $2 billion in cash — will be helpful. The initial phase of operations at the assembly plant VinFast is erecting near Raleigh will cost an estimated $4 billion. The facility will have the capacity to produce about 150,000 EVs annually.
But the longer-term goal would nearly double the price tag, adding more passenger car capacity, a battery plant, and a line to produce EV buses, as well.
Shares surge — then slide back a bit
The strong performance of the VinFast listing could serve as comfort to those who have worried that the stock market is no longer favoring SPAC deals. A number of other wannabe automakers who used this route to raise cash, but most, including Rivian and Lucid, have seen their share prices tumble from early highs.
And VFS shares did slip almost immediately after the market closed. Shortly before 6 p.m. EDT, the stock had slipped to $34, a $3.06, or 8.26% decline. That could reflect short-term profit-taking, some analysts said. But the stock will clearly be in the spotlight in the days and weeks to follow.
VinFast Chief Financial Officer David Mansfield told Reuters the company will be looking at the possibility of raising more cash going forward. “We don’t need more equity capital but if an opportunity is presented, we’ll obviously take advantage of that while we can,” he said.