By Medha Singh
(Reuters) -Shares of Vietnamese electric automaker VinFast tumbled for a second straight session on Thursday, giving up some of the gains from a meteoric surge in its Wall Street debut that saw it eclipse the market values of Ford and General Motors.
VinFast’s shares dropped nearly 34%, bringing the stock’s total decline to 46% in the past two sessions.
With 99% of the company controlled by founder Pham Nhat Vuong, the stock’s tiny float is susceptible to more volatility.
Just $44 million worth of VinFast’s shares were traded on Thursday, compared to turnover of $27 billion in Tesla, which fell 2.8%.
Meanwhile, the cash-burning company’s lofty valuation could be at risk as it looks to raise more capital over the next 18 months. It faces an ambitious annual goal set by Vuong to sell 50,000 EVs, more than twice the sales notched up so far this year.
“VinFast may well represent a new successful competitor in the EV space (but) unlike Tesla’s entry years ago, the space is now crowded with offerings from several manufacturers,” said Rick Meckler, partner at Cherry Lane Investments in New Jersey.
VinFast hit an eye-popping valuation of $85 billion on its first day of trading on Tuesday. That was more than three times the valuation at which it merged with a blank-check company Black Spade Acquisition, making it Asia Pacific’s biggest M&A deal this year.
Followings deep losses in the past two days, VinFast’s stock market value is now about $46 billion, compared to General Motors’ value of $45 billion and Ford Motor’s $47 billion value.
The automaker has also struggled to retain senior executives and offer share-based compensation at a time when it is looking to shift to a new “hybrid model” for sales, bringing in distributors and dealers for overseas markets.
Shares of other EV firms including Lucid and Fisker that listed through blank-check deals have also fallen since their debut.
“The initial strong debut seems trading driven – lots of buyers chasing a limited float – and it will be difficult for the stock to maintain this valuation, particularly once more shares become available,” Meckler said.
After VinFast said on Tuesday it wants to sell its cars through dealers, in addition to its direct-to-consumer approach, several U.S. dealers contacted by Reuters said they were open to the idea.
(Reporting by Medha Singh in Bengaluru; additional reporting by Noel Randewich in Oakland, Calif.; Editing by Arun Koyyur, Sriraj Kalluvila, Alexandra Hudson and Andy Sullivan)