After a stellar debut, shares of Vietnamese electric vehicle manufacturer VinFast fell for a second day

Written by Medha Singh

(Reuters) – Shares of Vietnamese electric car maker VinFast fell for the second straight session on Thursday, giving up some gains from a surprise rally in a Wall Street debut that saw it outperform the market valuations of Ford and General Motors.

VinFast shares are down 20%, weighing on the Nasdaq and taking the automaker’s loss to 35% in the past two sessions.

With founder Pham Nhat Vuong controlling 99% of the company, the small float on the stock is subject to more volatility.

Only $33 million worth of VinFast shares were trading as of midday, compared to $19 billion in revenue at Tesla, which is down 1%.

Meanwhile, the cash-burning company’s outsized valuation could be at risk as it looks to raise capital over the next 18 months. It faces an ambitious annual target set by Vuong to sell 50,000 EVs, more than double the sales achieved so far this year.

“VinFast may represent a successful new competitor in the EV space (but) unlike Tesla’s entry years ago, the space is now crowded with offerings from many manufacturers,” said Rick Meckler, partner at Cherry Lane Investments in New Jersey.

VinFast achieved a staggering $85 billion valuation on its first day of trading on Tuesday. That was more than three times the valuation at which it merged with Black Spade Acquisition by blank check, making it the largest M&A deal in Asia-Pacific this year.

In the wake of its losses in the past two days, VinFast’s stock market value is about $56 billion, compared to General Motors’ value of $46 billion and Ford Motor’s value of $48 billion.

The automaker has also struggled to retain top executives and offer stock-based compensation as it looks to shift to a new “hybrid model” of sales, bringing in distributors and dealers for overseas markets.

Shares of other electric vehicle companies including Lucid and Fisker that have been listed through blank check deals have also declined since their debut.

“The initial strong start appears to be driven by trading — lots of buyers chasing a limited float — and it will be difficult for the stock to maintain that valuation, especially once more shares become available,” Meckler said.

After VinFast said on Tuesday that it wanted to sell its cars through dealers, in addition to its direct-to-consumer approach, several US dealers contacted by Reuters said they were open to the idea.

(Reporting by Medha Singh in Bengaluru; Additional reporting by Noel Randwich in Oakland, CA; Editing by Arun Koyoor, Sriraj Kaluvella and Alexandra Hudson)

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