Why VinFast Auto Stock Soared Higher This Week | Old North State Wealth News
Connect with us

Economy

Why VinFast Auto Stock Soared Higher This Week

Published

on

Shares of VinFast Auto (NASDAQ: VFS) stock shot up over 60% this week, according to data from S&P Global Market Intelligence. The Vietnamese automotive group that makes electric vehicles (EVs) saw sizable early demand for its affordable SUV that is going to be sold around the world, including in the United States. Shares are still down over 95% from all-time highs when the stock shot up after its initial public offering (IPO) in late 2023.

Here’s why VinFast Auto stock was soaring this week.

An electric vehicle that costs less than $10,000?

VinFast Auto is trying to bring affordable EVs to the masses. It has a range of SUVs that it plans to sell around the globe and take advantage of the EV revolution.

Its newest vehicle is the VF 3, which is launching at an extremely affordable price of just $10,000. Even after this promotional period, the car will cost just $20,000, which is still significantly less than other EVs right now. The somewhat reasonably priced Model Y from Tesla starts at over $30,000, but it’s still unaffordable for many consumers even in the United States.

After just 66 hours from launching pre-orders, the VF 3 now has nearly 30,000 customer orders. This surge in demand is a great sign for the company and likely why the stock rocketed higher this week.

Stay cautious with this stock

Even though there is solid momentum with the brand, VinFast Auto is a treacherous stock that investors should be cautious of. In 2023, it lost $2.4 billion on $1.2 billion in revenue, which is a steep hole to climb out of. It is burning money quickly and will need to scale its automotive operations in order to reach profitability. With so much competition in the EV space, this will be a tough task, with success very uncertain.

We’ve seen this story before with other EV start-ups like Rivian Automotive, Lucid Motors, and Fisker. Carmaking is a competitive field with legacy players hitting the EV space, large pure-plays like Tesla playing a large role, and the looming supply coming from the Chinese EV brands. Even though VinFast has some momentum, it is hard to argue why anyone should own the stock right now, especially given how unprofitable its underlying business currently is.

Should you invest $1,000 in VinFast Auto Ltd. right now?

Before you buy stock in VinFast Auto Ltd., consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and VinFast Auto Ltd. wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $578,143!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of May 13, 2024

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

Why VinFast Auto Stock Soared Higher This Week was originally published by The Motley Fool

Read the full article here

Trending

Copyright © 2022 ONSWM News. Content posted on the Old North State Wealth News page was developed and produced by a third party news aggregation service. Old North State Wealth Management is not affiliated with the news aggregation service. The information presented is believed to be current. It should not be viewed as personalized investment advice. All expressions of opinion reflect the judgment of the authors on the date the articles were published. The information presented is not an offer to buy or sell, or a solicitation of any offer to buy or sell, any of the securities discussed.