By VinFast Auto’s stock experienced a series of ups and downs on Friday following the announcement of a significant funding opportunity. The Vietnamese electric vehicle manufacturer revealed a stock sale agreement with Yorkville Advisors, which will grant them access to up to $1 billion in funding. This agreement allows Yorkville Advisors to purchase new stock over a span of 36 months.
VinFast’s CFO, David Mansfield, expressed enthusiasm about the new equity funding, stating that it provides them with valuable flexibility and capital to expand their business globally. Mansfield also emphasized that they are not obligated to utilize the full amount of the funding, but the transaction aligns with their goal of opportunistically raising capital while adding liquidity to their shares over time.
It is widely known among investors that VinFast needs additional capital to advance its business operations, as it has not yet achieved profitability. At the current stock prices, the $1 billion funding would equate to approximately 175 million shares, accounting for roughly 8% of the outstanding 2.3-plus billion shares.
As of September, VinFast had approximately $131 million in its financial reserves. Additionally, they recently reported a third-quarter operating loss of around $370 million, despite generating $343 million in revenue during the same period.
Following the announcement of the funding agreement, VinFast’s stock initially rose during premarket trading, but later experienced fluctuations in both directions. As of 9:25 a.m. on Friday, the stock was down 0.9%. In comparison, S&P 500 and Nasdaq Composite futures were down 0.3% and 0.5%, respectively.
This level of volatility is typical for VinFast’s stock, which has experienced an average daily fluctuation of 18% since completing its merger with a special purpose acquisition company in mid-August. While trading volatility has subsided to some extent, it still remains high. Over the past 20 trading days leading up to Friday, the average daily movement in the stock price was nearly 8%.
VinFast’s shares reached a peak of $93 on August 28, but since then, they have plummeted by 94%. On Thursday, the stock closed at $5.69, indicative of the rollercoaster ride investors have experienced.
At present, VinFast holds a market value of approximately $13 billion, which is approximately $3 billion higher than Rivian Automotive’s market cap excluding its cash reserves.
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