https://www.barrons.com/articles/vinfast-stock-price-short-interest-e864ec83
Vietnamese EV maker VinFast Auto VFS –19.05% has had an incredible start to its life as a publicly traded company. It was founded in 2017 and is now one of the most valuable automakers on the planet after selling just a handful of vehicles.
Aggressive investors may think about shorting the stock—borrowing shares they don’t own and selling them, betting they can buy it back later at a lower price. They should be careful.
VinFast (ticker: VFS) was trading at $25.69 midday Thursday, down almost 15%. Shares dropped about 19% Wednesday after rising an incredible 255% on Tuesday, the first day of trading for shares on the Nasdaq exchange.
At current prices, VinFast has a market capitalization of about $60 billion, more than either Ford Motor (F) or General Motors (GM), and is worth more than all U.S. EV start-ups combined.
While VinFast sold about 11,300 EVs in the first half of 2023 and has the capacity to make about 300,000 EVs a year, it isn’t profitable and still needs more capital to build its business. VinFast used more than $1 billion in cash in the first quarter.
Short sellers are starting to circle. About 1.2 million shares are sold short, says Ihor Dusaniwsky, managing director at short-selling research firm S3 Parnters.
That is only 0.05% of the roughly 2.3 billion shares outstanding. But the total shares outstanding doesn’t really matter. The 1.2 million is about 6% of the roughly 17 million to 21 million shares issued as part of the company’s merger with a SPAC called Diamond Spade Acquisition. Not all of those shares are trading. Some are likely being held by SPAC insiders.
All that means that VinFast stock might be squeezable. A short squeeze happens when short sellers are forced to cover all at once, driving up a stock price to surprising levels because they have trouble finding shares to buy.
Supply and demand of an individual stock matter to the price over a short time span, just like earnings and cash flow matter over the long run.
How successful VinFast will be in the future is hard to tell. While the valuation is surprising, bearish investors should tread carefully, at least until more stock is available to trade.
