Shares of VinFast Auto (VFS -6.57%) stock collapsed in Monday morning trading, falling by 11% through 9:45 a.m. ET -- and it's no great mystery as to why.
The electric vehicle maker may soon drop more than 100 million new shares of its stock onto the market.
First, buy VinFast stock -- then sell VinFast stock
The details of the transaction VinFast is contemplating are contained in a Form F-1 registration statement that was filed with the Securities and Exchange Commission Monday morning. As described therein, the world's most famous Vietnamese carmaker plans to issue as many as 100.8 million shares of its stock to a Cayman Islands underwriter called "YA II PN, Ltd" (and abbreviated as "Yorkville"), "from time to time" and "at any time" from right about now up through Nov. 1, 2026.
The prices that Yorkville will pay for these shares will be 97.5% of the market price at the time of issuance. So if a transaction occurred right now, for example, it would be at about $4.90 a share.
In turn, Yorkville will be able to resell these shares on the market at whatever prices it is able to find bidders at.
What this means for VinFast shareholders
The aim of this sale is to raise up to $1 billion in new cash to fund the expansion of VinFast's electric car production capacity in the U.S., Indonesia, and elsewhere in Southeast Asia. Yorkville will not be permitted to acquire enough shares in VinFast to give it more than a 19.99% stake in the company, unless shareholders give their approval.
VinFast says it currently has more than 2.3 billion shares of common stock issued and outstanding. So this final restriction would cap the number of VinFast shares that Yorkville could own at about 467 million.
In the meantime, based on the current stock price, this sale and resale transaction promises to provide as much as $494 million for VinFast's expansion plans. It also promises to raise the company's total share count by about 4%, diluting current shareholders out of roughly that much ownership interest in the company and in its future profits.
That may not sound like a lot, but recall: VinFast currently only has about 32 million shares "floating" and available for trade. So putting another 100.8 million shares on the market also would quadruple the number of shares trading. Combined with the 75.8 million shares that VinFast previously filed to begin trading, trading volumes could multiply by as much as 5.5 times.
The upshot is that VinFast's float is growing fast. On the positive side, that means the stock's price will become less prone to manipulation. However, it will also be less prone to rapid rises and declines, potentially making it less attractive to day traders. If they're not pleased with this evolving dynamic, it could explain why VinFast stock plummeted Monday morning.
