When VinFast Auto (NASDAQ: VFS) reported its first-quarter financial update this week, it had a mixed report for investors. The Vietnamese electric vehicle (EV) manufacturer reaffirmed that it expects to produce 100,000 EVs this year. But its first-quarter vehicle production and revenue were still a disappointment.
That led analysts at investment banking firm BTIG to lower their stock price target for VinFast from $8 to $5 per share. The new price target would still represent a gain of 98% from the stock’s current $2.52 price over the next 12 months or so. BTIG analyst Gregory Lewis and his team also feel the stock is still a buy.
VinFast stock has been on a wild ride since it first went public through a special purpose acquisition company (SPAC) merger in August 2023. After soaring to more than $80 per share, reality set in for the early-stage EV maker, and shares have since dropped to the low single digits.
This week the company said it only generated about $300 million in revenue in the first quarter and it reported a higher loss than expected. While BTIG is one of only four analyst firms that cover VinFast, the expectation was for revenue of more than $400 million.
But VinFast has expansion plans across the globe that it hopes will result in the 100,000 vehicle production plan for 2024. That will take a major effort since first-quarter production was below 10,000 units. VinFast has agreements with 16 new dealerships in the U.S. as it constructs a manufacturing facility in North Carolina. It hopes to increase its brand awareness as it imports vehicles ahead of the North Carolina plant’s opening.
The analysts think that the expansion of its dealership network and growing production capacity will allow shares to rebound from its recent level. Investors might want to take a wait-and-see approach, however. Much uncertainty, as well as a high amount of capital spending, make this stock too risky at this point in 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 stocks mentioned. The Motley Fool has a disclosure policy.
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