It was only a matter of time in this ongoing bull market that a sparkling new EV stock became the ephemeral darling of the market, only to see its fortunes reversed as sanity returned to the collective psyche of investors. Vietnam's VinFast Auto (NASDAQ: VFS) recently rose to unfathomable heights largely on the back of mispriced expectations and is currently in the process of returning to its fair market value, in a move that is reminiscent of the heydays of the post-COVID period.
For the benefit of those who might not be aware, Singapore-based VinFast offers two compact electric SUVs - the VF6 and VF7 - as well as two full-fledged eSUVs - the VF8 and VF9 models - in the US. The company's production is primarily based within a "fully digital" $1.5 billion, 828-acre facility on the Cat Hai island in Vietnam. The company delivered around 11,300 EVs in the first half of 2023, with the full-year deliveries expected to materialize at around 25,000 units. The company recently went public by undergoing a reverse merger with the SPAC Black Spade Capital, with the stock of the combined company debuting on the Nasdaq exchange on the 15th of August, 2023.
I continue to view $VFS as the biggest EV bubble since $NKLA. While $VFS has plunged from $180B market cap at peak it still has $40B market cap vs $GM $45B, $F $48B and $RIVN $15B (net of cash). VFS delivered 11.3K EVs in 1H (RIVN 21K) and might deliver 25K vehicles in 2023 (vs… https://t.co/fZT4tftunT pic.twitter.com/VjTDFYMJBj
— Gary Black (@garyblack00) September 8, 2023
This brings us to the crux of the matter. At its peak toward the end of August, VinFast shares were changing hands at a price of around $80, corresponding to a peak market capitalization of $200 billion. Currently, the stock is trading at $16.30, which equates to a market cap of $37.51 billion.
Yet, according to analysts such as the Future Fund's Gary Black, VinFast's fair value lies at around $5 per share, equating to a market capitalization of just $11 billion.
$VFS $VFSWW I've confirmed warrants are exercisable this morning https://t.co/4ykpkMT8xa
— RLH Capital (@valwithcatalyst) September 11, 2023
Meanwhile, VinFast shares are down 5 percent today as Black Spade Capital's warrants have now become exercisable, allowing their holders the opportunity to purchase VinFast's ordinary shares at a fixed price of $11.50 per share. Given the sizable arbitrage involved, it would make sense for some speculators to buy the company's shares at the offered discount and then try to unload those shares in the market.
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