VinFast’s (VFS), stock has been in a narrow range ever since last October, as the concerns over this Vietnamese firm continued. The stock price has been stuck between $2.10, which is the main support level, and $9. This was the case for the past year. The stock is now down over 90% since its high. Its market capitalization has risen to over $9 billion.
Risky EV bet
We wrote on Tuesday about Mullen Automotive ,an American company which is destined to go bankrupt and run out of cash soon.
Mullen has joined other companies that are out of cash, such as Lordstown Motors or Fisker. Canoo Faraday Future and Workhorse Group, among others, are still hanging on and at a high risk of bankruptcy.
VinFast is a Vietnamese firm that is attempting to compete with American electric vehicle companies such as Tesla, Lucid and Rivian. The company also wants to be a serious competitor for Chinese electric vehicle brands such as BYD and Nio.
A company that faces significant risks is facing a challenge. As more people choose hybrids, the competition is increasing in this industry. Demand for EVs is increasing, but not as much as in previous years.
Tesla is a good example, as it has perfected the art and scientific of manufacturing. The stock of this company has fallen by more than 23% since its peak in the year. This means that they are currently in a bear market.
The company’s robotaxi business was delayed and it published weak financial reports in July. VinFast is doing even worse than Tesla if Tesla has problems. VinFast decided to postpone its North Carolina factory in July after downgrading its car delivery estimates.
VinFast is keen to delay the construction of its plant in order to compete with Tesla on their home market. The company will be unable to get government incentives for its vehicles if it does not have an American factory.
Positively, the company announced several steps to expand into other countries. Recently, the company expanded into Indonesia with 15 new dealer stores. The company also entered into an agreement with Qatari dealers to start selling their vehicles.
Results for VinFast in Q1
VinFast’s latest results show that it delivered 9,689 cars in the first three months, an increase of more than 1,780 vehicles from Q1’23. The deliveries are lower than those of the last quarter, when VinFast delivered 13,513 vehicles.
The company also reported that the number of e-scooters it shipped in Q1 was 6,632, down from 9,757 in Q1’23 to 24,309 in Q4’23. The scooter market was struggling, as these numbers showed.
VinFast reported revenues of about $302m in the first three months, which is a significant increase over what they made in the previous year. The company made a loss of $618 millions and this trend is likely to continue.
Historically it has taken EVs a few more years before they start to make a profit, as Rivian or Lucid have shown. Rivian had a net loss of over $17 billion in the last five years, even though the company was delivering vehicles.
VinFast had set a goal of delivering 100,000 units this year. However, the company reduced that number in July, as conditions worsened. It is confident that it can deliver 80,000 units this year.
VinFast second-quarter estimates
VinFast’s earnings, scheduled to be released on Thursday of this week, will likely have a significant impact on the share price.
VinFast recently announced that they had delivered 12058 cars in the second-quarter, which is a 24 percent increase over Q1, and a 26 percent YoY. In the first six months of this year, it delivered 21,747 cars.
Analysts expect that the results will show the revenues of the company at $440 millions in Q2. Analysts also predict that the company’s annual revenue in 2025 will reach $2,49 billion. The estimates above are based on just four different estimates.
VinFast is facing a lot of challenges. Its primary problem, like other EV firms, is that it has a stretched balance sheet. The company is currently losing hundreds of million of dollars, but ended last quarter with cash of $124 millions.
Stock price analysis for VinFast
On the daily chart we can see the VFS shares have been trading in a narrow range over the last few months. The price has been below the trendline connecting the high points of the past year.
The stock is consolidating at the 50-day moving average while the accumulation/distribution indicator has moved sideways.
VinFast’s stock will most likely experience a significant bearish break after its Thursday results are released. The next level to monitor is $3. Be aware that there could be significant stock volatility following earnings.
As updates occur, this post VinFast Stock Has Stalled: Brace For Volatility Ahead of Earnings may be updated.
