Stock of Vinfast Plunges, Wiping Out $90 Billion in Market Value

The ongoing VinFast Auto trading narrative is unfolding with increasing intrigue. The shares of the Vietnamese electric vehicle (EV) start-up relinquished a six-day winning streak on Tuesday, experiencing a significant decline of 44%, leading to the erasure of approximately $90 billion in market value.

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As a result of this substantial drop, Pham Nhat Vuong, the controlling shareholder of VinFast, witnessed a substantial erosion of his paper wealth by approximately $67 billion. Prior to the recent downturn, the value of Vuong's VinFast stake stood at approximately $141 billion at the close of trading on Monday. This impressive valuation positioned him slightly below Jeff Bezos on Bloomberg's roster of the world's wealthiest individuals. However, by the conclusion of Tuesday's trading, the value of his stake had contracted to approximately $74 billion, situating him just ahead of Jim Walton, the son of Walmart (WMT) founder Sam Walton.

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The intricacies of Vuong's holdings of VinFast stock are multifaceted. Vingroup (VIC.Vietnam) holds roughly 1.2 billion of VinFast's total outstanding shares, which amount to 2.3 billion. Within this arrangement, Vuong possesses a 51% stake either directly or through Vietnam Investment Group (VIG), where Vuong is identified as the sole shareholder. Additionally, about 1.1 billion VinFast shares are held by VIG and Asian Star, another entity under Vuong's control.

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Ultimately, this mosaic of holdings empowers Vuong to exercise influence over approximately 99.7% of VinFast stock, with direct or indirect ownership, through investment entities, extending to nearly 1.7 billion shares.

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These particulars are documented in VinFast's submissions to the Securities and Exchange Commission. However, the company has yet to respond to inquiries seeking clarification on its ownership structure.

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While the one-day loss is undoubtedly significant, it's important to note that the value of Vuong's stake at the time of the special purpose acquisition company (SPAC) merger was approximately $18 billion. Notably, despite the recent decline, his net worth still reflects an impressive growth of over 300%.

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In the context of VinFast, the company maintains a market capitalization that surpasses $100 billion. This valuation permits it to retain its position as the third most valuable automaker globally, trailing only Toyota Motor (TM) and Tesla (TSLA). Accounting for warrants and options, VinFast still surpasses Porsche (P911.Germany) and BYD (1211.Hong Kong).

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BYD, as China's largest EV manufacturer, has managed to sell over 1.2 million electric vehicles—comprising battery-electric and plug-in hybrid models—in the first half of 2023. In contrast, VinFast recorded sales of approximately 11,300 battery-electric vehicles during the same period.

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Investors continue to hold optimistic expectations for VinFast's future prospects. However, the valuation remains challenging to rationalize in light of the current circumstances.

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