VinFast Files for U.S. IPO, Ray of Hope for Frozen IPO Market

The U.S. IPO market, which has been frozen for almost four months now, received a ray of hope when Vietnamese automaker VinFast filed for an IPO. The filing comes at a time when growth stocks including green energy stocks have been under pressure. Except for Tesla, most of the EV plays trade at a steep discount to their highs. What’s the date and price for VinFast IPO and what kind of valuations could the company attract in the listing?

The most recent mega IPO from an EV company was that of Rivian. The company, which is backed by marquee names like Amazon and Ford, priced the IPO at $78 per share and raised over $13 billion from the listing in the fourth quarter of 2021.

Rivian's market cap soared above $150 billion but it has fallen since then and trades at almost half of its IPO price. The performance of EV names that went public through a SPAC reverse merger has been even more dismal.

Most of the EV companies that went through a SPAC reverse merger including Arrival, Canoo, Lordstown Motors, Workhorse, and Nikola trade below the SPAC IPO price of $10. Lucid Group is a notable exception and despite falling sharply from its peak, it's still trading above $20. Fisker is also holding above the SPAC IPO price of $10.

Considering the performance of EV stocks over the last year, markets have been wary of these companies. This is especially true considering the current macroeconomic environment where loss-making growth names, a group where all EV companies barring Tesla fall, have been under pressure amid rising interest rates.

VinFast was founded in 2017 and started delivering cars in 2019. The company launched three car models which included a sedan, an SUV, and a hatchback. It also launched three e-scooters. By the end of 2022, the company intends to only sell electric cars.

VinFast hasn’t specified the IPO date and price yet. Reuters reported that the process could take a few months. Previously, VinFast CEO Le Thi Thu Thuy had said that the company might consider a U.S. IPO in the second half of 2022.

The company needs the funds to finance its growth plans. VinFast intends to spend $4 billion to build its U.S. plant in North Carolina. Half of the money would be spent in the first phase. The company would have an annual nameplate capacity of 150,000 cars when the plant is ready in mid-2024. It's also considering setting up a plant in Germany where Tesla already has a functional Gigafactory.

Since VinFast hasn’t specified the IPO price yet, we don’t have its proposed valuation yet. In 2021, it was said to be seeking a $60 billion valuation. That, however, might be tall ask now looking at the bloodbath in startup EV companies.

For example, Lucid Motors and Rivian, which are much stronger and well-known brands in the U.S. and are also delivering vehicles, have an enterprise value of $33 billion and $19.5 billion, respectively. Even NIO’s enterprise value is less than $30 billion.

We’ll have to wait for the IPO price and valuation before deciding on whether to buy the VinFast IPO. The company might need to temper its expectations considering the valuations of other startup EV companies and the $60 billion valuation looks out of the question now.