The head-scratching rally in VinFast Auto shares came to a sudden halt on Tuesday, erasing $83 billion of market value.
The unprofitable and thinly traded maker of electric cars tumbled 44% in New York, snapping a six-day winning streak. It had been rising faster than any other large-cap stock worldwide, jumping 688% from its debut in a SPAC listing on Aug. 15 through Monday’s close.
Despite the wipeout, VinFast’s nearly $107 billion market capitalization still makes it larger than companies like BlackRock Inc. and FedEx Corp.
The last time a stock with a tiny free float rose from relative obscurity to the ranks of the world’s largest companies, it didn’t end well for investors. AMTD Digital Inc., another US-listed company with roots in Asia, baffled market veterans a year ago by soaring more than 32,000% in the span of a few weeks. The money-losing financial services company’s paper value at one point reached over $400 billion, exceeding that of JPMorgan Chase & Co.
AMTD has since tumbled more than 99%, hitting a record low last week. Its valuation now stands at a humble $1.1 billion.
While VinFast and AMTD differ in key respects, their tiny free floats and appeal to momentum-chasing retail investors have made both vulnerable to extreme booms and busts.
“VinFast’s current valuations are unsustainable,” said David Blennerhassett, an analyst who publishes on the Smartkarma platform. “And because there are so few VinFast shares available, anyone who buys, say 50,000 shares, will move the stock.”
The wild ride has raised eyebrows across Wall Street, but supporters of VinFast have a case to make.
It’s one of Vietnam’s most high-profile companies, backed by the country’s wealthiest man Pham Nhat Vuong — who has established Vingroup JSC, a conglomerate spanning homes, hotels, hospitals and shopping malls. The group, together with its affiliates and lenders, have deployed $8.2 billion to fund VinFast’s…