The sharp share price increases in the first trading session on August 15 were a surprise not only to investors, but also to VinFast.
The VinFast share closing price was $37, or three times higher than the reference price, causing the capitalization value to reach $85 billion, which was even higher than powerful automobile manufacturers such as Mercedes-Benz, Ford and General Motors.
At the online press conference held after the debut, VinFast CEO Le Thi Thu Thuy said she was surprised when the share price reached $37 per share.
Prior to that, when working with investment banks, most of them predicted that VinFast shares would fall to below $10 per share in the first trading session. VinFast leaders then thought that the company’s market capitalization value would be around $23 billion, and admitted that $85 billion was beyond all expectations.
In the first trading session, 6.7 million VFS shares were transferred, worth r$200 million. However, at the second session, the selling pressure was relatively strong. The VFS share price at times dropped to $25 per share, and then recovered and reached $30.11 per share.
On the same day, VinFast shares saw the capitalization value drop by $25 billion and then increase again. The decrease at the end of the session was $16 billion and VFS capitalization value decreased to $69 billion. At the trading session, 2.8 million shares changed hands.
Despite the decrease, VinFast’s capitalization value is still high and among the top 3 electric vehicle (EV) makers in the world.
The heavy fluctuations of VFS caused the assets of Pham Nhat Vuong to rise and fall continually. Forbes’ latest update showed that the assets of Vietnam's richest businessman were much higher than days before, at $37.5 billion. He is at the 33rd position on the list of the world's richest billionaires, above MacKenzie Scott, the ex-wife of Jeff Bezos (36th).
The sharp VinFast price increase and high capitalization value of $85 billion, many experts say, was not a surprise at all. The debut of technology of an electric vehicle manufacturer usually catches high attention.
Investors witnessed share prices of electric vehicle manufacturers soar right after their listing.
According to Reuters, electric vehicle shares such as Nikola Corp and Lucid saw prices soar and then drop after listing via SPAC (special purpose acquisition company) a type of back door listing, or reverse merger.
The capitalization value of Nikola decreased from $13.9 billion before listing to $1.4 billion, while Lucid’s value fell from $24 billion in 2021 to $15.5 billion.
In the case of VinFast, the number of free floating shares was relatively low, just 4.5 million units, out of 2.3 billion shares in total.
After the first trading session, 6.7 million VFS shares were transferred, higher than the total free floating share amount, which showed that there was trade in the transaction market with the T+0 time.
The big gap between the amount of shares available for transactions and the total amount of shares in circulation, while demand is high, helps push prices up. However, the share price increase at the first trading session caused profit-taking demand to increase.
With current events, it may take more time to determine a more balanced price of VinFast stock as well as its capitalization. Volatility will become more accurate when the free floating percentage is higher.
The free floating percentage of below one percent is too small. If 100 percent of stocks can be freely traded, the situation may be different. The current low free floating rate will cause losses to those seeking short sales.
In the time to come, when a new amount of shares may be released, including several millions of shares from partners’ warrants, the VFS share supply in the market will be higher, and the price performance more accurate.