Whether it's a quarterly report, a news headline, or something else, investors often have to take the good with the bad, find silver linings in disappointing figures, or perhaps even recognize when things aren't as great as they appear.
VinFast Auto (VFS +3.20%) investors right now are trying to parse the significance of fourth-quarter delivery figures that didn't hit management's goal for 2023. Let's look at what was reported and see if there is a silver lining to be found. Look hard enough and a reason might be found that things are better than they appear.
A look at VinFast's latest numbers
Vietnam-based multinational auto manufacturer VinFast announced on Jan. 18 that it delivered 13,513 electric vehicles (EVs) during the fourth quarter. That was a healthy 35% jump from the previous quarter, although its full-year deliveries of 34,855 EVs still fell short of management's lofty 40,000 to 50,000 goal for 2023.
Now put that total into a broader perspective. VinFast has only delivered 42,291 EVs globally since 2021. The truth is that VinFast faces an uphill battle breaking into its key U.S. and European markets as an up-till-now completely unknown brand. The fact that it was able to essentially sell nearly 35,000 of its all-time 42,291 figure in the last year alone is pretty impressive.
That's the silver lining in this report (even if it missed its lofty full-year goal).
NASDAQ: VFS
Key Data Points
More to VinFast's story?
As previously alluded to, there's a little more to the story. To first add a little context, VinFast has a parent company, VinGroup Joint Stock Co. It's the largest conglomerate in Vietnam, with holdings in tech, industrial, real estate, retail, and services ranging from healthcare to hospitality. The conglomerate recently established an EV rental and taxi company called Green and Smart Mobility (GSM).
You might see where this is going: During the second and third quarters, roughly two-thirds of VinFast's sales were to GSM. So while the silver lining of handing over an impressive amount of vehicles globally last year is tempting to grab onto, the truth is that much of the company's progress could be attributed to GSM's buying. (VinFast, as of this writing, hasn't yet released details of how many fourth-quarter sales were to GSM.)
It's certainly a nice boost for VinFast to have GSM taking its production, but it's also fair to say that this pipeline can't and won't last forever.
How should investors approach the stock?
VinFast now has to prove it can sell vehicles to consumers rather than just GSM. The good news is that the company recently inked a handful of independent dealers in North Carolina, New York, Texas, and Kansas, with plans to sell its VF8, as well as at least four other models when they launch in the region.
It's a baby step on the way to its larger goal of having a network of dealerships with 125 points of sale across the U.S. -- backed by its $4 billion EV factory in North Carolina, due to be finished in 2025.
For now, investors will have to take the fourth-quarter deliveries with a grain of salt. While the company sold a fairly impressive number of vehicles in 2023, it still hasn't proved it can quickly gain traction with U.S. consumers.
VinFast remains an intriguing long-term investment option within the EV industry, but investors would be wise to consider more stable options at the moment.
