The stock (ticker: VFS ) fell for a second straight day on Wednesday, down 11% to close at $41.27. of
Only 11% for VinFast stock is a modest move. Since the company merged with a special purpose buyout company and changed its stock symbol to “VFS,” the average swing over the 12 trading days has been 50% up or down.
The first lesson is that any day’s movement is basically a coin flip. VinFast stock rose seven times and fell five times. If investors look back at the time the SPAC merger was approved, which resulted in an increase in volatility, the total is eight rises and seven falls.
The second lesson is that flexibility begets more flexibility. When stocks jump or fall, large movements follow, like tremors after an earthquake. Rarely do investors take a stock up 255% in one day — it happened with VinFast on August 15 — and then decide it’s worth it perfectly.
Lesson three is about value. Sometimes the market does not reflect the intrinsic value of an individual business.
The SPAC merger will value VinFast at around $23 billion, which is higher.
Rivian Automotive
‘s (RIVN) market capitalization. Rivian offers more cars than Vinfant, but $23 billion is in the EV startup’s ballpark and that’s the level at which Vinfant and its investor group feel good about a deal. At an intraday high of $93 a share, VinFast’s stock was worth about $215 billion
Toyota Motor
(TM) from Rivian.
Wednesday’s move dropped Vinfant to a market capitalization of $96 billion. That moves it behind the fourth most expensive automaker on the planet
Porsche
(P911. Germany).
Tesla
( TSLA ) and Toyota ( TM ) are one and two. China
Baidi
(1211. Hong Kong) The hair behind VinFast is based on data
FactSet
.
Ford Motor
(F) and
General Motors
( GM ) shares are worth a total of about $94 billion.
The fourth lesson is that there are other ways to ensure that the market is rational.
Vinggroup
(VIC. Vietnam) has almost 1,2 VinFast stock billion shares, which is almost $ 50 billion, but Vingroup market capitalization is only about $ 9 billion.
“VFS” is up about 10% since it started trading, but the move doesn’t reflect Vingroup’s VinFast holdings. That tells investors that either there is an arbitrage opportunity in Vingroup stock or that few think VinFast’s valuation is real.
The fifth less volatility attracts traders. More than 100 million shares of VinFast have been traded in the last 12 days. Only 17 million or 20 million shares not held by insiders are available for trading. This means that the average holding period for VinFast stock recently is less than two days.
A final point to remember is that in the long run, cash flow and earnings will ultimately determine what VinFast stock, or any stock, is worth.
Write to Al Root at [email protected]
