Why Are Investors Backing Off VinFast Auto?

VinFast Auto (NASDAQ: VFS) was an intriguing investment from the get-go. At a time when investors are flipping over every rock to find the next , VinFast dominated its home Vietnam market, offered compelling cost advantages, and had state-of-the-art production facilities, and a very wealthy backer and founder. The electric vehicle (EV) maker also had extensive plans to expand into Europe and the U.S. markets. The hype has faded, however, and recently investors seem to have been backing off. What's going on?

The biggest obstacle for investors was VinFast's recent weaker-than-expected quarterly results. Friday VinFast reported a second-quarter loss of $0.33 per share on sales of $357 million, which fell far short of Wall Street estimates calling for a $0.21 per-share loss on sales of $419 million. Compared to the prior year, VinFast's loss widened from a $0.24 per-share loss on sales of $328 million, putting sales growth at 9.1% year over year.

The biggest issue, perhaps, surrounds the company's full-year delivery estimates, which appear to be a tad aggressive currently. VinFast delivered 13,172 EVs during Q2, which brings the first half of 2024 up to roughly 22,000 deliveries. In a vacuum, these results look good: Q2 deliveries were up 43% year over year, and the first half of 2024 deliveries were a 101% increase compared to the prior year.

Continue reading

Source Fool.com