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Vietnamese electric vehicle newcomer VinFast is experiencing a rollercoaster ride on the New York Stock Exchange. Its debut was spectacular. On its first day of listing on the U.S. Nasdaq, VinFast's stock price surged 68%, pushing its market capitalization close to $86 billion (about 115 trillion KRW). VinFast's valuation instantly surpassed the U.S. 'Big 3' automakers as well as established global manufacturers like BMW, Mercedes-Benz, and Volkswagen. However, on the second day of trading, a flood of profit-taking sales caused the stock price to plummet. On the 16th (local time), VinFast's stock price fell nearly 19%, and in after-hours trading, it was down over 4% (as of 8:06 a.m. KST).

[Image source=Reuters Yonhap News]

The rapid surge in VinFast's stock price, which lasted only a day, has raised concerns that it might follow the bubble trajectory of other electric vehicle startups that once heated up the market as challengers to Tesla, the industry leader. On that day, The Wall Street Journal (WSJ) warned that VinFast could follow in the footsteps of Rivian, Lucid, and Lordstown Motors, which debuted spectacularly in recent years but then saw their stock prices plunge. These companies experienced stock price surges fueled by expectations but soon faced bubbles bursting due to production delays and discrepancies with actual performance, leading them to the brink of delisting and barely maintaining their existence.

Rivian entered the market with high expectations to lead the U.S. electric vehicle market with its first electric pickup truck, making a grand debut on the stock market in November 2021. On its first day on the Nasdaq, Rivian's market cap surpassed those of the U.S. Big 3 automakers, and within five days, it became the world's third-largest automaker by market cap ($152 billion). Lucid's market cap also grew to $89.8 billion, briefly surpassing Ford. However, due to minimal earnings and unstable production capacity, the fundamentals were considered greatly inflated, leading to a decline in market expectations and a downward trend in stock prices. Currently, Rivian and Lucid's stock prices have dropped 84-88% compared to their IPO prices. Lordstown Motors, which boldly debuted with plans to launch the first electric pickup truck to surpass Tesla, could not withstand launch delays and financial pressures and eventually filed for bankruptcy protection in June.

[Image source=Reuters Yonhap News]

VinFast also took a similar detour by merging with a Special Purpose Acquisition Company (SPAC) after failing a traditional initial public offering (IPO). VinFast went public by merging with Black Spade Acquisition (BSAQ), which was already listed on Nasdaq. Listing through a SPAC merger has the advantage of shortening the listing process compared to a traditional IPO. However, it has been criticized as a loophole used by non-qualified or marginal companies for backdoor listings, potentially inflating valuations based on future performance. Lucid and Nikola faced allegations that some analyses of their corporate value were unrealistically exaggerated during the SPAC merger process, which has looser regulatory standards than traditional IPOs. Due to such exaggeration controversies, Lordstown Motors and Faraday Future lost 90% of their market capitalization after listing.

VinFast's debut came amid intense price-cutting competition in the electric vehicle industry ignited by Tesla. There are growing concerns in the market that the entry of established automakers and new electric vehicle startups will lead to a bloody price war rather than market expansion. Since early this year, Tesla has repeatedly cut prices in key markets such as the U.S. and China, and it is expected that latecomers will join the price-cutting competition. The key question is whether VinFast can secure competitiveness as price competition intensifies in its main markets, the U.S. and Europe. VinFast delivered 11,300 vehicles in the first half of this year, while Tesla's deliveries reached 889,000 during the same period.

[Image source=AP Yonhap News]

VinFast's parent company, Vingroup, is the largest conglomerate in Vietnam. Since entering the automotive industry in 2017, Vingroup has produced internal combustion engine cars and motorcycles at its Hai Phong factory in Vietnam but has been fully committed to electric vehicles since last year. Vingroup has also announced plans to build an electric vehicle factory in North Carolina, U.S., with an annual capacity of 150,000 units to target the European and American markets.

Foreign media have expressed concerns about VinFast's stock price trajectory. Forbes stated, "Despite a successful debut, it is uncertain how long VinFast's stock rally will continue," noting that due to the very limited number of shares available for trading, a volatile market with sharp price fluctuations is expected for the time being. WSJ also predicted, "Confusing stock price movements are inevitable due to limited buying and selling activity."

This content was produced with the assistance of AI translation services.