Is VinFast Stock as Bad as Mullen Automotive?

VinFast Auto (NASDAQ:VFS) is taking the momentum stock world by storm.

Since coming public in a special purpose acquisition company (SPAC) transaction on August 15, Vietnam’s most famous (read: “only famous”) car company has been tradable for a total of 13 days. On only one of those days has the stock moved less than double digits in percentage terms — and twice the stock has moved triple digits. (Specifically, on IPO day, when VinFast stock closed up 255%, and on August 22, when the stock shot more than doubled.

If you’re a momentum stock trader, you probably think these are the moves from which fortunes are made. In you’re a value investor on the other hand, you probably have a different thought. You might even think that VinFast stock kind of resembles the price movements shareholders have seen at another electric vehicle start-up: Mullen Automotive (NASDAQ:MULN).

And here’s the thing: Since IPO’ing two weeks ago, VinFast stock is up more than five-fold in share price. Mullen Automotive, on the other hand, which went public on November 5, 2021, and which has experienced similarly large price swings over its lifetime, ended up losing 99.7% of its value, including 96.2% of its value lost over just the past year. 

And maybe that worries you. But also, maybe it shouldn’t.

There are, after all, significant differences between America’s Mullen Automotive, and Vietnam’s VinFast. Production rates for one thing. Mullen Automotive is famous for spitting out press releases about what it’s going to do in the future, promising to produce thousands of Campus EV Cargo Vans, Class 1, Class 3, and Class 4-6 commercial vehicles, Mullen FIVE and Bollinger B1 and B2 EVs, and even a “Mullen-GO” urban commercial delivery vehicle. When it comes to announcing actual sales of vehicles to paying customers, however, Mullen press releases tend to read like this one from Tuesday this week:

“Mullen Automotive, an emerging electric vehicle (“EV”) manufacturer, has received a multiunit vehicle purchase order from NRTC Automation Group for … three all-electric commercial class 3 Mullen trucks” (emphasis added).

Yes, you read that right. Three.

In contrast, whatever you might think about its stock price, VinFast Auto sold closer to 24,000 cars last year, and has already sold 11,300 electric vehicles so far in 2023. It’s launched six EV models to date, the VF 6, VF 7, VF 8, and VF 9 (all intended for international sale, including in the U.S., where VinFast is building a factory), and the VF e34 and VF 5, both sold only in Vietnam.

And, since VinFast is already producing cars at scale, it turns out that in contrast to Mullen, which booked a grand total of $308,000 in revenue over the past year, VinFast racked up sales of $634 million last year.

Granted, not everything about VinFast is perfect. The stock certainly has flaws, beginning with its debt load of $1.8 billion, continuing through its losses ($2.1 billion last year), and including also the fact that VinFast’s sales declined 10% in 2022, and are continuing to decline in 2023 as well.

Make no mistake, there’s no guarantee at all that VinFast is going to succeed as an automaker in the long run, much less suddenly turn into the next Tesla. Indeed, if sales don’t resume growing and losses don’t slim, VinFast could even go bust — Fast.

But as a business at least, VinFast is nowhere near as bad as Mullen Automotive. It’s not even close.

Overall, VinFast has a Smart Score of 5 (out of 10) on TipRanks, meaning that it is likely to perform in line with market expectations. This score suggests that the company has both strengths and weaknesses that investors should consider. (See VinFast stock analysis)

Smart Score is TipRanks’ proprietary quantitative stock scoring system that evaluates stocks on eight different market factors. The result is data-driven and does not involve any human intervention.

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.