HomeBusinessWhy VinFast Auto Stock Crashed Today

Why VinFast Auto Stock Crashed Today

Shares of VinFast Auto (NASDAQ: VFS)the Vietnamese automaker that went public last summer via a merger with a special purpose acquisition company (SPAC) plunged 11.5% at 11 a.m. ET on Wednesday after reporting big misses on both sales and earnings for the first fiscal quarter of 2024 .

On the earnings front, analysts were already pessimistic, predicting the company would lose $0.22 per share on revenue of $450 million. It turned out that analysts were not pessimistic enough. VinFast lost $0.26 per share and revenue was only $302.6 million.

VinFast Q1 revenue and profit (make that “losses”)

The news wasn’t all bad (just mostly bad). Total revenue in the first quarter grew 270% year over year, while car sales revenue rose 324%. Gross profit margins improved from negative 173% to “only” negative 50%. Yet the company continued to lose money at an alarming rate.

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And it could also lose momentum. While electric car deliveries increased 444% year-on-year, they fell 28% sequentially compared to the fourth quarter of 2023. Deliveries of electric scooters – previously VinFast’s main business – fell both year-on-year (32%) and consecutive (decrease 73%).

Will VinFast shares be sold in 2024?

VinFast is trying to reverse the decline in sales by almost tripling the number of American dealers with which it maintains relationships (to 16) and by signing up dealers in Indonesia, Thailand and Oman.

It has also returned to its roots with a new electric bike that it is trying to sell in the US for $2,599 as it awaits the start of sales of its VF 9 EV later this month. And it promises to sell 100,000 electric vehicles worldwide this year.

However, VinFast may not live to see the end of this year. In the first quarter alone, negative free cash flow was a whopping $717.3 million, and the company says it only has $123.3 million left in the bank. At the rate it burns cash, VinFast could run out of money in a few weeks instead of months — and be out of luck.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why VinFast Auto Stock Crashed Today was originally published by The Motley Fool

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