VinFast vehicles
Source: VinFast Twitter

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

By

Apr. 8 2022, Published 8:35 a.m. ET

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?

Article continues below advertisement

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.

EV stocks have been under pressure.

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.

Article continues below advertisement

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.

Article continues below advertisement

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 to build a plant in north caroline
Source: VinFast Twitter

VinFast signs deal to set up a plant in North Carolina

Article continues below advertisement

VinFast is transitioning towards electric cars.

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's IPO date and price haven't been announced.

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.

Article continues below advertisement

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.

Article continues below advertisement

VinFast hasn't provided a proposed valuation.

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.

Article continues below advertisement

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.

Should you buy the VinFast IPO?

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.

Advertisement

Latest IPOs News and Updates

    Market Realist Logo

    © Copyright 2022 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.