Shares of Vinfast Auto (VFS -0.99%) plunged this week and were trading 33.5% lower through 10:30 a.m. ET Friday, according to data provided by S&P Global Market Intelligence.
The stock hit a peak of $93 per share on Aug. 28 -- just days after its initial public offering. Since then, though, VinFast has fallen off a cliff and hit an all-time low Friday. With this week's fall, the electric vehicle (EV) maker's stock is now down a staggering 93% from its peak.
VinFast Auto is reportedly struggling to gain traction in its home market, Vietnam. But that's not the only reason why the stock is plunging this week: That decline also has to do with something that VinFast's CEO said in an interview this week.
VinFast Auto needs a lot of money
In a video interview with Bloomberg that aired Monday, VinFast Auto CEO Le Thi Thu Thuy revealed the company's growth plans, stating that it plans to expand aggressively in Asia, starting with Indonesia. The EV maker is also looking at options in India.
However, VinFast Auto is still a young company. Although it has the backing of Vietnam's largest conglomerate, Vingroup, it still requires a lot of money to run its operations and grow. The CEO confirmed this in the Bloomberg interview, stating that VinFast Auto will continue to raise "a lot of capital" to fund growth, and that its need for funds was a primary reason why the company had listed itself on the Nasdaq stock market.
Case in point: On Friday morning, VinFast Auto entered into an agreement to issue shares worth $1 billion to investment manager Yorkville over the next 36 months, subject to certain conditions.
VinFast Auto stock remains a risky bet
VinFast Auto is already selling thousands of cars every month, and is expanding in the U.S., Europe, and Asia. Management also has expressed confidence in the company's ability to deliver 40,000 to 50,000 EVs globally this year, which is a pretty impressive feat considering that the company only delivered its first EV in Vietnam in December 2021.
However, VinFast Auto has a lot to prove, and its tiny free float of less than 1% makes the stock even more volatile. Although its CEO said the company will release more shares into the market over time to increase its investor base as it raises funds, not many are willing to bet on this EV stock just yet, especially now when global geopolitical uncertainty and high interest rates in the U.S. pose threats to the cyclical auto industry.
