Why Shares of VinFast Auto Collapsed This Week

Shares of recently minted public company VinFast Auto (NASDAQ: VFS) collapsed as much as 44.6% this week, according to data provided by S&P Global Market Intelligence. The Vietnamese manufacturer of electric vehicles (EVs) just went public through a special purpose acquisition company (SPAC) and soared over 100% on the back of investor hype and its low float. Now, shares have come back down to Earth and -- at a price of $17 -- the stock is down 50% from its debut price of close to $40.

SPACs were hugely popular in 2020 and 2021, with a record amount of start-ups going public through these reverse mergers during the height of the COVID-19 pandemic. While the hype around SPACs has subsided, it still is a viable route for some companies to enter the public markets. This is what VinFast Auto decided to do when it merged with Black Spade Acquisition back in August.

VinFast is a Vietnamese automaker focused on scaling its EV operations and exporting cars to North America and Europe. The company made its first U.S. delivery in March and is building a plant in North Carolina that hopes to produce 150,000 vehicles per year by 2025. This could present an uphill battle, as VinFast is operating well behind the eight ball of EV incumbents such as and even upstarts like Rivian Automotive, which is on pace to deliver 50,000 vehicles this year (Tesla is at well over 1 million).

Continue reading

Source Fool.com