VinFast stock price: Bearish case for VFS and its $15B market cap

December 12, 2023 08:00 PM PST | By Invezz

VinFast stock price: Bearish case for VFS and its $15B market cap — Image source: Invezz

The bearish case for VinFast

There are several reasons why VinFast’s $15 billion market cap does not make sense. First, VinFast is in the electric vehicle industry that is not doing well. Most companies in the industry, including Tesla, Ford, and Lucid Motors, are having trouble growing their deliveries and revenue.

Tesla has slashed its vehicle prices several times this year. Lucid has also slashed prices and raised capital as the cash burn accelerated. Ford has reduced its Lightning production while General Motors is now focusing on its ICE vehicles. It is hard to see an EV company that is doing well.

At the same time, American dealers are avoiding taking additional EV inventories because of their falling sales. Reports indicate that EVs are spending more than 100 days in dealerships, a longer period compared to ICE’s 52 days.

Second, VinFast’s vehicles have not had positive reviews, especially in the United States. Most reviewers have named the VF8 as the worst car in America. This is an important thing since most customers first check out for online reviews before making their purchase. As such, there is a likelihood that its vehicle growth will remain under pressure for a while.

Watch here: https://www.youtube.com/embed/DF7kaLTsNHQ?feature=oembed

Third, it is hard to justify the company’s valuation. A $15.6 billion valuation makes VinFast one of the biggest automotive companies in the world. For one, Rivian, which manufactures quality trucks has a market cap of over $17 billion. Nissan has a valuation of $15 billion while Renault has $11.75 billion.

Fourth, VinFast will need to raise additional funds in 2024 as it invests in the American market. The company has about $130 million in cash and over $1.8 billion in long-term debt.

Since running an EV company is quite expensive, I suspect that the company will need to raise cash soon. One figure to prove this is its total net loss. According to SeekingAlpha, the company’s net loss jumped to over $670 million in the last quarter. This makes it a cash-burning machine.

Therefore, with VinFast, we have a company that is growing but one that faces many challenges to justify its pricey valuation.

VinFast stock price forecast

VFS chart by TradingView

Turning to the daily chart, we see that the VFS share price formed an evening star candlestick pattern in November. In technical analysis, this is one of the most popular bearish signs.

VinFast shares have pulled back below all moving averages as bears target its November low of $5.33, which is about 18% below the current level. A break below that price will see it move to an all-time low of $4.70. In the long term, I believe that the shares will crash to less than $3.

The post VinFast stock price: Bearish case for VFS and its $15B market cap appeared first on Invezz

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