When VinFast Auto (NASDAQ:VFS) released its first quarter financial update this week, the report was mixed for investors. The Vietnamese electric vehicle (EV) maker has reaffirmed that it plans to produce 100,000 electric vehicles this year. But vehicle production and sales for the first quarter remain disappointing.
That led analysts at investment bank BTIG to lower their stock price target for VinFast from $8 to $5 per share. The new price target would still represent a 98% gain from the stock’s current price of $2.52 over the next 12 months or so. BTIG analyst Gregory Lewis and his team also rate the stock as a Buy.
What is the future of VinFast Auto?
VinFast stock has had a wild ride since its initial IPO a merger of special purpose acquisition companies (SPACs) in August 2023. After climbing to over $80 per share, reality set in for the manufacturer of electric vehicles in the start-up phase, and shares have since fallen to the low single digits.
This week, the company said it only generated about $300 million in revenue in the first quarter and reported a larger-than-expected loss. Although BTIG is one of four analyst firms that cover VinFast, the expected revenue was over $400 million.
But VinFast has expansion plans across the world that it hopes will result in a production plan of 100,000 vehicles for 2024. This will require a major effort since first quarter production was less than 10,000 units . VinFast has entered into agreements with 16 new dealerships in the United States as it builds a manufacturing facility in North Carolina. It hopes to increase brand awareness by importing vehicles before the North Carolina plant opens.
Analysts believe that the expansion of its dealer network and the growth of its production capacity will allow the shares to rebound from their recent levels. Investors may want to take a wait-and-see approach, however. High uncertainty, along with a high amount of capital expenditures, make this stock too risky at this stage of its development.
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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 securities mentioned. The Mad Motley has a disclosure policy.
VinFast Auto Stock Has 98% Upside Potential, Wall Street Analyst Says was originally published by The Motley Fool
