VinFast’s Soaring Stock Price: Who’s Profiting?

The astronomical market value of VinFast might not be generating the wealth investors believe.

The stock price of VinFast, an electric vehicle startup from Vietnam, is on an incredible upward streak. For the sixth consecutive trading day, its stock price has risen, and its market value has reached an almost unimaginable level. However, this massive market value might not be creating the kind of wealth investors expect.

On August 28th, the stock price of VinFast surged by about 20%, reaching approximately $82.50 per share. This has pushed the company’s market value to around $190 billion. This value surpasses the combined total of General Motors (GM), Ford (F), and Stellantis (STLA), the parent company of Chrysler. VinFast’s market value is more than twice that of BYD (1211.HK), China’s largest electric vehicle manufacturer, and a quarter of Tesla’s (TSLA) value, which is the largest electric vehicle manufacturer globally.

These numbers simply don’t add up. VinFast is not yet profitable, and its production capacity is only a fraction of those traditional automakers mentioned above. The stock seems to be part of the “meme-territory” phenomenon, as only around 16-17 million shares are tradable, with the remaining 2.3 billion shares held by insiders.

Nevertheless, a 436% increase over six days is nothing to scoff at. This surge has created an approximate $165 billion increase in market value. Some individuals might indeed profit significantly, but the situation might not be as rosy as it appears. Tradable shares have only generated around $1 billion in wealth, and there might be very few investors who have held this stock for the entire six-day period.

Over the past six days, approximately 65 million shares of VinFast have been traded, and this number is still increasing. The tradable shares have changed hands about four times, with an average holding period of around 1.5 days.

Most of the $165 billion in paper wealth has been collected by insiders. However, many investors cannot sell their shares as increased selling could push the stock price down. Finding someone to buy a few thousand shares is one thing, but finding someone to buy millions of shares is another.

The trading frenzy around VinFast is undeniable. However, it’s not necessarily a “short squeeze.” According to S3 Partners, interest in shorting VinFast’s stock has recently dropped almost to zero, indicating that traders are not deliberately trying to manipulate the stock.