If you feel that the world doesn't need another electric vehicle (EV) maker, you're certainly not alone in that sentiment. Yet, the world is a big place, and there may be room for Vietnam-headquartered EV manufacturer VinFast Auto (VFS 6.54%) to grow over the next decade.
Granted, no crystal ball can tell investors whether VinFast's market cap will expand through 2034, or whether the company will even exist by then. Yet, if you have a speculative side to your personality and can forgive certain fiscal faults, VinFast stock might earn a small position in your long-term portfolio.
VinFast gets "Wild" with concept vehicles
In an increasingly crowded global EV market, new start-ups must stand out to survive. At least, that seems to be the core concept behind VinFast's recent vehicle-model releases.
VinFast hopes to penetrate the U.S. EV market and "expects to reach approximately 130 points of sales in [North America]" by the end of this year. Meanwhile, the company released no fewer than four new SUV models last year in Vietnam.
Clearly, VinFast is highly active and ambitious despite evidence of slowing sales growth in the global EV market. In defiance of this evidence -- or, perhaps, to combat the market's slowing growth -- VinFast has released several eye-catching vehicle models.
One of them is the VF Wild midsize electric pickup truck, which has a flexible bed size that can be adjusted to span 5 to 8 feet. That, along with the vehicle's sleek and curvy appearance, is VinFast's main selling point, though the vehicle also features a "panoramic glass roof and digital side mirrors to improve aerodynamics."
Also "wild" in its own way, VinFast's VF 3 mini-SUV is, for lack of a better descriptor, charmingly cute. Small as it is, the VF 3 is a four-seater with a driving range of over 125 miles per full charge. And it's easy to imagine the VF 3 fitting into parking spaces that wouldn't accommodate some full-size EVs.
VinFast's unusual vehicle offerings aren't limited to cars. Not long ago, the company rolled out the DrgnFly e-bike, which sports what the company calls a "V-shaped, elongated frame reminiscent of the image of a flying dragon." The DrgnFly also provides a driving range of up to 63 miles, so open-minded e-bikers evidently won't have to charge up too frequently.
Charging up with rising revenue
If any of these concept vehicles catch on, VinFast's sales could grow exponentially over the next 10 years. The company is already demonstrating impressive sales growth, even if this doesn't appear to be reflected in the share price.
Indeed, there may be a compelling buying opportunity here based on the divergence between VinFast's stock price and the company's sales trajectory. In 2023's fourth quarter, VinFast's revenue grew 133% year over year to $437 million. For the full year, the company's revenue increased 91% to $1.2 billion.
VinFast's Q4 2023 gross margin of negative 40.1% and full-year gross margin of negative 46% will undoubtedly be off-putting to some prospective investors. But these results show solid improvement over the company's Q4 2022 and fiscal year 2022 gross margins of negative 82.6% and negative 82%, respectively. Plus, bear in mind that VinFast spent $213 million in Q4 2023 on advancing the company's VF 6 and VF 7 SUV models, building VinFast's North Carolina-based production plant, and developing showrooms and charging stations, among other things.
Like practically every other start-up EV maker, VinFast could cease to exist within 10 years and the company's share price might go to zero. That's why I think it's important to maintain a small position size in VinFast stock, if any at all.
It's possible that VinFast could capture a multinational market for unusual, concept-driven, new-energy vehicles. Evidently, even VinFast's "wildest" EVs are fully functional and have decent driving ranges.
Plus, they look pretty awesome and will draw attention to drivers who crave it. So, if VinFast can capitalize on the "wow" factor of its eye-catching EVs and continue to close the margin gap, there just might be a multibagger here.
