VinFast, a Vietnamese electric vehicle maker, has seen its stock market valuation jump above those of Ford and General Motors (GM) on its first day of trading.
Stock in the company, which has yet to turn a profit, catapulted 255% on their inaugural day on the Nasdaq exchange in New York.
VinFast's stock market evaluation was set at an impressive $85bn, far outstripping Ford's and GM's respective $48bn and $46bn.
Motor industry heavyweights and newer manufacturers are vying for a piece of the burgeoning EV market.
The listing resulted in an increase of around $39bn to the fortune of Pham Nhat Vuong, the chairman and founder of VinFast and who is already Vietnam's wealthiest individual.
Filings to the regulatory body indicate that he holds 99% of the company's available stocks, most of which are owned by Vietnam's biggest conglomerate, Vingroup JSC.
This restricts the amount of shares that other investors can trade, causing substantial changes in price.
There was not much trading activity for VinFast stock on Tuesday, only about $185 million worth of shares moved.
Bill Russo, Founder and CEO of Shanghai-based Automobility, declared that investors have faith that the future is in electric and envision a low-cost East Asian country as a rival in the US.
The markets are of the opinion that due to geopolitical factors, Vietnam, not China, is going to be the nation in question.
Rather than opting for a traditional share offering, VinFast entered the public market using a "shell" corporation, also known as a Special Purpose Acquisition Company (Spac).
Spacs are sometimes employed by start-ups to expedite the frequently lengthy and costly process of making a private organization go public. In simpler terms, it entails the merger of a business not listed on a stock exchange with one that is.
At least two EV manufacturers, Lordstown Motors and Faraday Future, have utilized Special Purpose Acquisition Companies (Spacs) in the last three years to become publicly traded.
Nevertheless, both businesses have seen greater than 90% drops in their stock values since their unions.
According to Mr Russo, VinFast can stand out from the competition due to the fact that they are financially supported by Vingroup, thereby enabling them to obtain capital from an entity with a demonstrable record of success.
He stated that the majority of EV startups are unsuccessful because they don't have lucrative core objectives, and the external investment they receive will cease to exist once they expend money more quickly than they make it.
Nevertheless, VinFast still has to contend with formidable challengers vying for supremacy in the market.
Tesla - helmed by Elon Musk - and BYD, supported by veteran investor Warren Buffett, are leading the market in reducing prices to bolster their sales.
VinFast reported that 11,300 EVs were shipped during the first six months of the year, compared to the 889,000 vehicles delivered by Tesla over the same timeframe.
According to Dan Ives of Wedbush Securities, Tesla will remain the preeminent corporation producing EVs, though there will be multiple successful entities.
VinFast has laid a solid groundwork for achievement in the field of electric vehicles.
Comments