Electric vehicle (EV) manufacturer VinFast Auto (NASDAQ:VFS) stock may come out of left field for U.S.-based investors, especially since the company hails from Vietnam. Yet, it’s publicly tradable, and now that the shares are down, American stock traders ought to take a closer look at VinFast.
VinFast makes electric cars and trucks as well as electric bikes, which can be strong sellers in densely populated regions. The EV field is quite crowded now, so VinFast has to stand out to stay competitive.
As we’ll discover, VinFast definitely stands out. At the same time, stock traders still aren’t convinced of VinFast’s growth prospects. Still, the data suggests that this unusual EV maker is making strides in 2024 so far.
VinFast wants you to “drive your style”
Before we get to VinFast’s operational and financial results, prospective investors should first understand that VinFast isn’t different just because the company is located in Vietnam. Indeed, VinFast’s bold, unconventional spirit is what might drive the company’s future growth and success.
Here’s an example of what I’m talking about. With the tagline “Drive your style,” VinFast introduced its DrgnFly model electric bike earlier this year. The DrgnFly’s design “stands out with a V-shaped, elongated frame reminiscent of the image of a flying dragon.” At the same time, the bike also features “a wide handlebar, balloon tires and an ergonomic riding position.”
Suffice it to say, you’ll get a lot of attention if you roll down the street on a DrgnFly e-bike. Another VinFast offering that allows you to “drive your style” is the VF Wild electric pickup truck, which doesn’t look as “wild” as the name might suggest. However, the vehicle does feature a “bed length designed to expand from 5 to 8 feet,” thereby “equipping the VF Wild with the largest bed in its segment.”
Then, there’s the VinFast VF-3 electric mini-SUV. It’s small and adorable and ideal for densely populated areas. At the same time, the VF-3 is surprisingly practical, with a “target estimate of driving range of over 125 miles per full charge.”
In other words, investing in VinFast isn’t just a wager on a Vietnamese EV manufacturer. It’s also a bet that these unusual vehicle concepts will catch on and that the “wow” factor will boost VinFast’s top and bottom lines in the long run.
VinFast stock plunges despite revenue acceleration
Speaking of VinFast’s top and bottom lines, the automaker just released its first-quarter 2024 operational and financial results. You might be led to assume that the results were abysmal since VinFast stock plunged 10% within the first hour of today’s trading session.
Yet, I found nothing particularly objectionable in the results. For one thing, VinFast’s Q1-2024 EV deliveries increased 444% year over year to 9,689 units. Furthermore, the company’s revenue grew 270% year over year to $303 million. On top of all that, VinFast’s net earnings loss improved from 30 cents per share in the fourth quarter of 2023 to 26 cents per share in 2024’s first quarter.
Here’s the problem, or at least the probable driver of today’s share-price rout. Wall Street’s analysts expected VinFast to report revenue of $429 million and a net loss of 22 cents per share. So, the market didn’t appreciate VinFast’s improvement since the company didn’t live up to the analysts’ consensus forecasts.
On the other hand, only four analysts on Wall Street currently cover VinFast. This makes the idea of earnings beats and misses less definitive and, one might conclude, less useful for investors.
Another notable point is that, earlier this year, VinFast set a target of delivering 100,000 vehicles in 2024. That’s even though VinFast delivered a total of 34,763 vehicles in 2023.
Now, the company still expects to deliver 100,000 vehicles this year. That won’t be an easy feat, considering VinFast only delivered 9,689 units in 2024’s first quarter.
This is where executive-level confidence will likely outstrip actual performance. Still, the immediate 10% drop in VinFast stock seems overdone. VinFast didn’t live up to Wall Street’s standards, but those standards might not be meaningful or actionable right now. Therefore, if you’re on board with VinFast’s eye-catching vehicle concepts and undeniable sales acceleration, you might consider a VFS stock position that – much like the VF-3 mini-SUV – is small but ready to haul.
Disclaimer: All investments involve risk. In no way should this article be taken as investment advice or constitute responsibility for investment gains or losses. The information in this report should not be relied upon for investment decisions. All investors must conduct their own due diligence and consult their own investment advisors in making trading decisions.
