The electric vehicle (EV) sector is navigating choppy waters, with both startups and established players feeling the heat. Notably, even the juggernaut Tesla (TSLA) reported a decline in its Q1 deliveries, signaling a slowdown in demand for EVs.
Among the strugglers is VinFast (VFS), a Vietnam-based startup that entered the U.S. markets through a SPAC merger last year. The stock rose meteorically post-listing, hitting $93 and briefly surpassing the combined market caps of Ford (F) and General Motors (GM).
Fast forward to 2024, and VFS finds itself languishing as a penny stock near its all-time lows, reflecting the prevailing turmoil in the EV landscape.
VinFast Stock Forecast: Analysts Bullish
All four analysts covering VinFast rate it as a “Strong Buy.” With a mean target price of $10.50, representing a 156% upside from current levels, optimism is palpable. The high target of $13 is triple the stock’s current price, underscoring the bullish sentiment.
Although analyst coverage is scant, the upbeat outlook from brokerages contrasts with the stock’s downward trajectory.
Understanding VinFast’s Decline
Like its peers, VinFast has faced significant turbulence, with the stock shedding over 51% in 2024. The broader EV sector woes have hit hard, with Rivian (RIVN) and Lucid (LCID) witnessing 55% and 36% YTD losses, respectively.
The overcapacity in the EV industry, coupled with tepid sales, has sparked a fierce price war, eroding profit margins and amplifying losses among new entrants.
The Financial Reality of VinFast
Financially, VinFast is hemorrhaging cash, burning through $3.3 billion in 2023 and $2.2 billion in 2022. By the end of 2023, the company held a meager $168 million in cash and relied heavily on infusions from its parent company, Vingroup.
Similar to Lucid Motors, which receives substantial backing from Saudi Arabia’s PIF, VinFast leans on Vingroup’s unwavering support as it navigates the turbulent EV market.
The Complex Tapestry of VinFast
VinFast’s narrative is a mix of positive aspirations and stark realities. While the company targets the SUV market with an array of offerings at varying price points, operational challenges and competitive headwinds loom.
Plans for localization, expansion into new markets, and competitive pricing strategies underscore VinFast’s ambitions. However, the stock’s valuation metrics paint a cautionary picture, standing at a premium compared to its industry counterparts.
Despite potential advantages in global market access, VinFast’s unclear competitive edge and the saturation in the EV space raise concerns about its long-term viability.