VFS

Why VinFast Auto Stock Crashed Today

Shares of VinFast Auto (NASDAQ: VFS), the Vietnamese vehicle maker that went public in a merger with a special purpose acquisition company (SPAC) last summer, tumbled 11.5% through 11 a.m. ET Wednesday after reporting big misses on both sales and earnings for its first fiscal quarter of 2024.

Heading into earnings, analysts were already pessimistic, predicting the company would lose $0.22 per share on sales of $450 million. As it turned out, analysts weren't pessimistic enough. VinFast lost $0.26 per share, and its sales were only $302.6 million.

VinFast Q1 sales and earnings (make that "losses")

The news wasn't all bad (only mostly bad). Total first-quarter sales grew 270% year over year, with revenue from vehicle sales up 324%. Gross profit margins improved from negative 173% to "only" negative 50%. Still, the company continued to lose money at an alarming rate.

And it could be losing momentum as well. Deliveries of electric cars, while up 444% year over year, declined 28% sequentially from the fourth quarter of 2023. Deliveries of electric scooters -- formerly VinFast's main business -- declined both year over year (down 32%) and sequentially (down 73%).

Is VinFast stock a sell in 2024?

VinFast is trying to turn around the sales decline, nearly tripling the number of U.S. dealerships (to 16) with which it has relationships and signing up dealers in Indonesia, Thailand, and Oman.

It has also returned to its roots with a new electric bike that it's trying to sell in the U.S. for $2,599, at the same time as it awaits the start of sales of its VF 9 EV later this month. And it promises to sell 100,000 EVs worldwide this year.

VinFast might not live to see the end of this year, however. Negative free cash flow in the first quarter alone was a staggering $717.3 million, and by its own admission, the company only has $123.3 million left in the bank. At the rate it's burning cash, VinFast could be out of money -- and out of luck -- in a matter of weeks, not months.

Should you invest $1,000 in VinFast Auto Ltd. right now?

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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