5 Things You Need to Know About VinFast’s $3 Billion NYSE IPO

VinFast, the car-making branch of Vietnam’s huge industrial conglomerate Vingroup, is aiming for a New York Stock Exchange debut with an IPO that might rake in $2 to $3 billion, Bloomberg reports.

VinFast is only making gasoline-powered, internal combustion engine (ICE) cars at the moment, but it expects to have electric vehicles rolling off the assembly line by December and is testing robotic vehicles in California.

Is the IPO worth watching as a possible investment? Here’s some info to help you decide.

When Can You Buy VinFast Stock?

VinFast, which was founded just three years ago (though its parent, Vingroup, dates back to 1993), has not yet made its IPO public knowledge. Anonymous sources close to the matter have provided some details to Bloomberg, Reuters, and other news outlets however, giving a preview of what’s coming up despite the lack of some details.

The VinFast IPO is likely to occur in the second quarter (Q2) of 2021, or within the next 2.5 months. The NYSE offering is expected to bring in between $2 and $3 billion, winning VinFast the title of largest ever Vietnamese stock market listing if the forecasted haul is realized, and the first company from Vietnam to be listed on a U.S. stock exchange.

VinFast: 5 Pieces of Data To Help You Assess the Company

While VinFast is keeping some details of its IPO private for the moment, the company and its parent are providing data about the automaker’s sales and plans ahead of the IPO:

  1. $50 billion to $60 billion: This is the post-IPO valuation VinFast is looking for, according to several inside sources. For comparison, Tesla (NASDAQ: TSLA) currently has an enterprise value of approximately $644 billion, while traditional automaker Ford Motor Company (NYSE: F) is valued at roughly $163 billion.
  2. 50% sales increase: VinFast sold approximately 30,000 cars in Vietnam in 2020, and expects this number to rise to 45,000 in 2021. According to VietnamPlus, it sold 2,330 vehicles during March, a 35.6% month over month increase.
  3. 3 electric SUVs: The company is gearing up for the launch of three electric SUV models, alongside some electric motorbikes and buses. Its e34 electric car, offered for preorder in Vietnam for approximately $30,000, received 3,962 preorders within 12 hours of its March 24 announcement, according to the company. The VF31, VF32, and VF33 self-driving SUVs are also lined up for production starting in November, with American and European preorders expected in the same month and delivery in those markets earmarked for June 2022.
  4. Global strategy: VinFast is Vietnam’s biggest seller, but the company is also planning an aggressive worldwide expansion, with markets in Europe and North America targeted for 2022. This includes opening production facilities and launching “global showrooms.”
  5. U.S. production in 2022: The company plans to open an American factory in 2022, with Vingroup chairman and VinFast billionaire founder Pham Nhat Vuong pledging to contribute $2 billion of his own money toward opening the manufacturing facility. CEO Thai Thanh Hai remarked that the United States is likely to be VinFast’s first international market, and the automaker will pursue a strategy that “initially will develop high-end models for the U.S.,” Bloomberg reported. It has also secured an autonomous vehicle testing permit for public California roads.

The Bear Case: Why to Avoid VinFast

Given the last few months’ frenzy of IPOs and SPAC offerings, it’s clear investors have plenty of money to throw around and will buy just about any IPO with a slick presentation and a high-profile sector. EVs (electric vehicles) are certainly a hot ticket item with many startups, but several factors make VinFast’s long-term prospects look quite risky at this point:

  • The number of competitors: The popularity of electric vehicles is a double-edged sword for VinFast, providing a growing market but also stiff competition. Late in 2020, Barron’s reported 8 major American and 2 major Chinese EV automaker IPOs either recently listed or soon to be listed in the first half of 2021, and more have likely emerged since.
  • Tesla and NIO: Tesla’s market dominance in the United States makes the country a difficult environment for other EV makers to compete in, while NIO likely has a stranglehold on the Chinese electric vehicle market, particularly in the luxury segment where VinFast hopes to compete internationally.
  • A small home market: Unlike Tesla or NIO, VinFast doesn’t have a huge home market to support its international efforts if winning market share overseas proves an uphill battle. The American and Chinese automakers have a large customer base at home to sustain their expansion efforts, but VinFast operates in a small country with an economy a fraction of the size of those its rivals call home.

While it is possible VinFast will manage to carve out a profitable niche through some unexpected combination of factors, at the moment it appears to have too many potential pitfalls and disadvantages ahead to make it a good buy.  

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Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. Millennial Money is part of The Motley Fool network. Millennial Money has a disclosure policy.

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