Obviously, this kind of idiocy should never happen in a healthy stock market. But it has happened a lot.
By Wolf Richter for WOLF STREET.
VinFast Auto, the Vietnamese EV maker that’s part of the Vietnamese conglomerate VinGroup and that went public in the US via merger with a SPAC less than two months ago on August 15, 2023, has now become one of the all-time favorites in my pantheon of Imploded Stocks. The SPAC’s just keep on giving in the most hilarious manner.
On August 25, as the stock price was exploding, I laid out in detail the case of this misbegotten creature in the article, EV Maker VinFast’s Market Cap Spikes to $159 Billion on 9th Day of Trading. This Stuff Would Be Hilarious if it Weren’t so Serious. And I said, “as an extra special for VinFast, I’m keeping a beautiful slot open in my increasingly crowded pantheon of Imploded Stocks.”
And now VinFast has obtained this beautiful slot in my Imploded Stocks. Within 31 trading days, its shares [VFS] have imploded by 92%, and its market cap has imploded from over $230 billion to a still ridiculous $17 billion. But it’s a start. Couldn’t have happened to a better bunch of people. Thoughts and prayers. This is a chart of the stunning idiocy of this stock market:
The SPAC’s shares were at $10 on August 11, shot to $37 on the day of the merger, and then to the all-time high of $90 on August 28, giving the company a beyond-ridiculous market cap of over $230 billion, about five times the market cap of GM, though the outfit just started selling a few hundred imported EVs in the US; and in Vietnam, half of the feeble production was sold to the conglomerate’s own taxi company.
The world, whose EV SPACs had already been shoved into the pantheon of Imploded Stocks starting in 2021 – was simply speechless in front of such a creature – in front of the idiocy of the stock jockeys that were playing this game amid the detritus of EV SPACs, some of which have already filed for bankruptcy.
Having floated 0.3% of its shares in the US, while its chairman Pham Nhat Vuong effectively controls 99.7% of the shares, it was clearly designed to be a meme stock and not much else with a tiny float and a ridiculous valuation to begin with that then, enthusiastically embraced by the meme stock jockeys, shot beyond ridiculous.
Clearly, the company hoped to use this beyond-ridiculous share price to sell more shares in a secondary offering to the meme-stock jockeys, and take their money and burn it. Hopefully, the company can still pull it off – it couldn’t happen to a better bunch of people, thoughts and prayers in advance.
VinFast CFO David Mansfield admitted that it would try to sell more shares “for sure” over the next 18 months, and a market cap of $100 billion would allow it to raise a whole lot more cash from the meme-stock crowd than a market cap of $17 billion, or worse, $2 billion, or worse $50 million.
Obviously, this kind of idiocy should never happen in a healthy stock market. This is just nuts. But then, we live in an era where cryptos, which represent nothing, have no earnings or revenues or use, are driven to beyond-ridiculous highs only to then collapse, and it’s just like a big video game, but maybe a lot more fun. With VinFast it’s the same thing. It really doesn’t matter what the company does or fails to do. And there are essentially no victims here, just a lot of consensual hallucination.
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