VFS

Why VinFast Auto Stock Plunged More Than 30% This Week

What happened

Shares of VinFast Auto (NASDAQ: VFS) are falling fast and furious this week -- they were down a whopping 36.7% through 10:25 a.m. ET Friday, according to data provided by S&P Global Market Intelligence.

With this week's dramatic drop, the electric vehicle (EV) stock -- which made a sizzling debut in the U.S. in August -- is now 90% off its peak.

Ouch.

VinFast Auto reported a big jump in its deliveries and revenue for the third quarter on Oct. 5. Some shareholders, however, are still dumping the EV stock while they still can.

So what

Here are some important numbers from VinFast Auto's first-ever quarterly earnings release since going public in the U.S. (all changes are year over year unless otherwise mentioned):

  • EV deliveries: Up 5.2% sequentially to 10,027 units
  • E-scooter deliveries: Up 177% sequentially to 28,220 units
  • Revenue: Up 159% to $342 million
  • Gross loss: Down 28% to $102 million
  • Net loss: Up almost 34% to $623 million

VinFast Auto is a young company that delivered its first EV in Vietnam only in late 2021 and later entered the U.S. and European markets. It currently sells several SUV models in Vietnam, including VF 8, VF 9, VF 5, and VF e34, aside from two e-scooter models called the Feliz and Evo. Only the VF 8 SUV is available in the U.S. right now.

In September, VinFast Auto launched the VF 6 SUV in Vietnam and expects to start taking orders from Oct. 20. The SUV will be available in the U.S., Canada, and Europe as well.

So if VinFast Auto is so focused on growth and is already selling thousands of cars every month, why is the stock crashing?

The thing is, VinFast Auto released more than 46 million in ordinary shares earlier this week that were under lock-up agreements. It seems the shareholders of those securities have been selling a large portion of their holdings this week and sending VinFast Auto stock crashing.

In any case, VinFast Auto has a tiny free float, since it made less than 1% of its shares available to the public during its initial public offering. In other words, with its founder owning more than 99% of shares, VinFast Auto stock is bound to be volatile.

Now what

VinFast Auto also issued its guidance this week. It expects to deliver 40,000 to 50,000 EVs this year, begin deliveries of VF 7 and VF 3 models in 2024, and is planning to build factories in India and Indonesia to expand its global presence.

Going by these updates, VinFast Auto looks like the kind of EV stock you'd want to watch closely, provided you can stomach the volatility.

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Neha Chamaria 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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