VinFast Stock Experiences Increase Today. Worthy of Investment Consideration?
VinFast Stock Experiences Increase Today. Worthy of Investment Consideration?
Vietnamese electric vehicle (EV) manufacturer VinFast Auto (VFS), currently seeing a 16% surge in shares, had a significant climb of up to 23% during Thursday's trading.
This previously low-profile EV company garnered increased attention following its launch on U.S. stock exchanges in August 2023. The increasing publicity has also led to increased analyst coverage and worldwide acknowledgment.
Growing its reputation
VinFast is set to make its appearance in the Vietnamese delegation attending the United Nations climate change summit, COp28, commencing today in Dubai. This event will feature a display of VinFast's VF 9 flagship SUV alongside participation from the vice chairman of VinFast's parent company, Vingroup.
The vice chairwoman will participate in a discussion titled "Enhancing the Resilience of Sustainable Supply Chains." This represents a substantial global platform for a lesser-known EV manufacturer during a period in which they are expanding their production and are on the brink of establishing their first U.S. plant in North Carolina.
Analyst recommendation
Multiple analysts have also taken an interest in VinFast, with renowned auto sector expert Dan Ives of Wedbush recently advocating for the stock. Ives gave the company a buy rating and set a $12 price target, representing a potential 60% increase from the previous day's closing price. This evaluation would value VinFast with a market capitalization of approximately $25 billion.
VinFast anticipates selling between 40,000 and 50,000 EVs in 2023, according to Ives. However, his projections suggest that revenue could surge from approximately $1.4 billion in 2023 to $5.5 billion in 2025. It is essential to note that, even under these circumstances, the stock's valuation remains at a relatively high price-to-sales ratio exceeding 4.5 in 2025.
Nevertheless, this significant rise should encourage caution, especially considering the potential risks involved in this high-risk stock, even with today's promising showing at the COP28 climate summit.
VinFast's increased visibility and success have attracted interest in the company's financial prospects. Investors are now considering the potential returns from investing in VinFast's stocks due to its strong market position and analyst recommendations like Dan Ives' buy rating and $12 price target, which could significantly boost the company's market capitalization.
As VinFast expands its production and plans to establish a U.S. plant in North Carolina, it's crucial to consider the company's financial strategies for ensuring long-term sustainability, particularly in the face of this high-risk stock's high price-to-sales ratio.