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VinFast Auto: Navigating Through Volatility

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The Vietnamese electric vehicle (EV) start-up, VinFast Auto, has experienced another significant plunge in its stock price without any apparent catalyst. As investors await the stabilization of the shares after their recent wild fluctuations, it becomes crucial to consider the company’s future prospects and the implications for its stock.

On Thursday, VinFast (VFS) stock closed almost 27% lower, settling just below $18 per share. In contrast, the broader market indices, S&P 500 and Nasdaq Composite, experienced marginal declines of 0.3% and 0.9% respectively. This continuous downward trend over the past seven days has wiped out approximately $150 billion of market value.

It is worth noting that the stock was trading around $10 in early August, experiencing a dramatic surge to $93 following its merger with a special purpose acquisition company on August 10. Subsequently, on August 15, the stock symbol changed to “VFS.”

While some investors thrive on volatility, these unexplained swings can be disconcerting. VinFast stock has demonstrated remarkable volatility, with daily price movements averaging around 40% since the change in stock symbol.

However, as the dust settles, there will come a time when investors will need to assess the stock’s underlying fundamentals, a task that may prove challenging.

The valuation of EV start-ups varies significantly. Considering its debt, VinFast currently trades at approximately 22 times potential 2023 sales. By comparison, Lucid (LCID) carries a valuation of roughly 14 times, while Rivian Automotive (RIVN) seeks only around four times.

As the rollercoaster ride continues for VinFast Auto, investors must scrutinize and evaluate its potential with a cautious eye. Amidst the volatility, great opportunities may arise but understanding the fundamental aspects of the company is key to making informed investment decisions.

None of the start-ups in the electric vehicle industry have become profitable yet, but they possess the potential to manufacture hundreds of thousands of vehicles annually.

As of now, Wall Street has not provided any assistance in assessing the future prospects for these companies. There is no analyst coverage for these stocks.

However, ratings from various brokers are expected to be announced soon. Lucid, for instance, took around five to six weeks to receive its first rating after completing its SPAC merger.

It is uncertain how Wall Street will perceive these companies. The stock charts do not offer much guidance either.

According to Frank Cappelleri, the founder of CappThesis and a market technician, “That’s a wild chart. Technicals aren’t as useful in a situation like this.” Cappelleri relies on charts and moving averages to gauge investor sentiment and identify attractive buying opportunities or periods of reduced interest.

The history of VinFast’s stock does not reveal anything significant yet, as before August, the shares did not garner much attention. The stock merely reflected the cash value of the SPAC that merged with VinFast.

In a few months, analysts will likely provide their insights and the chart will contain more useful data. This could potentially lead to more stable trading patterns for the stock. However, it is crucial to refrain from making concrete statements at this stage, as uncertainties still loom.

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