VinFast Auto(NASDAQ: VFS) launched its VF 3 low-cost electric SUV in January at the Consumer Electronics Show in Las Vegas. But the Vietnamese electric vehicle (EV) maker didn't start accepting orders for the compact SUV until last week. And initial interest looks to be huge.
After reports that it received deposits for nearly 30,000 of the new EV model in under 72 hours, shares jumped as much as 15% today. While the stock has since given up some of those gains, it was still trading higher by 5.5% as of 12:55 p.m. ET on Thursday. That added to gains earlier this week for a total jump of almost 50%. But investors should temper any excitement.
An EV for under $10,000
Don't confuse today's move with the move earlier this week. This week's market trading saw a revival in meme stock mania. And VinFast's shares jumped along with other stocks that have high short interest. About 15% of the company's share float was held by short-sellers as of the end of April, according to MarketWatch.
Today, though, investors were cheering the large amount of interest in VinFast's low-priced SUV. But even that should be taken with a grain of salt.
The VF 3 is being offered at an introductory price of about $10,000, and many buyers are jumping at the offer. That special price is for the model that includes a battery subscription, but even including the battery up front only raises the cost to about $12,000.
VinFast is likely offering this promotion as a loss leader, without expecting profit. Once the introductory offer is over, the VF 3 will cost about $20,000 in its home market of Vietnam.
The company expects to deliver 100,000 EVs in 2024, so the volume of interest in the VF 3 is notable. But the company shipped fewer than 10,000 EVs in the first quarter. With the stock soaring this week without any meaningful fundamental reason, investors should remain wary of VinFast.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
