VinFast stock price outlook: Avoid this EV for now

VinFast (NASDAQ: VFS) stock price is struggling this year as concerns about its balance sheet, sales, and the electric vehicle industry remain. It has crashed by over 47% this year and is hovering near its all-time low.

A mountain of challenges remain

VinFast, the giant Vietnamese electric vehicle company, has come under intense pressure in the past few months. Most recently, the company struggled after the NHTSA initiated an investigation after VinFast V8 crash killed a family of four. 

It is still early to predict what the probe will show and the remedy actions that the agency will seek. Most importantly, it is unclear whether the probe will affect the company’s sales in the long term.

VinFast is also struggling because of the rising fears that the EV industry is going through a major slowdown. Most companies, including Tesla, Nio, XPeng, and Li Auto have published weak financial results. 

VinFast, on the other hand, reported mixed results as its EV volume jumped. It delivered 9,689 vehicles, a big increase from the 1,780 it delivered in the same quarter in 2023. These deliveries were, nonetheless, lower than the 13,513 it sold in Q4’23. It expects that its deliveries will be 100k this year.

VinFast’s revenue came in at $302 million, a 269% increase from what it did in the same quarter in 2023. Its gross margin came in at minus 49.8%, meaning that it is losing money on each vehicle it sells. As a result, the total loss stood at over $618 million.

My biggest concern about VinFast is that its cash burn is continuing while its cash balances remains under pressure. It ended the last quarter with over $123.28 million in cash and cash equivalents. Most notably, it ended the quarter with over $1.1 billion in inventory, which is a common red flag.

The other concern is that VinFast is highly overvalued considering that it has a market cap of over $10 billion. In contrast, Rivian, which is widely seen as a top EV, has a market cap of about $11.1 billion. I believe that Rivian should have a significantly bigger valuation than VinFast.

VinFast stock price forecast

VFS chart by TradingView

The daily chart shows that the VFS share price’s attempts to recover found a strong barrier at $6.36 in May. Since then, the stock crashed to the key support at $4.36 and is now hovering at the 50-day and 25-day Exponential Moving Averages (EMA).

VinFast’s Money Flow Index (MFI) has moved below the overbought point and is approaching the neutral point at 50. The Relative Vigor Index (RVIG) has formed a bearish crossover. Therefore, the stock’s outlook is relatively bearish, with the next point to watch being the year-to-date low of $2.30.