shares Finfast Auto (NASDAQ: VFS) Shares rose more than 60% this week, according to data from Standard & Poor's Global Market Intelligence. Vietnamese automobile group that manufactures electric cars (Electric vehicles) saw significant early demand for the affordable SUV that will be sold worldwide, including the United States. Shares are still down more than 95% from their all-time highs when the stock soared after its initial public offering (IPO) in late 2023.
Here's why VinFast Auto stock is up this week.
An electric car that costs less than $10,000?
VinFast Auto is trying to provide affordable electric cars to the masses. It has a range of SUVs that it plans to sell worldwide and capitalize on the electric vehicle revolution.
Its latest vehicle is the VF 3, which is launching at a very reasonable price of just $10,000. Even after this promotional period, the car will cost only $20,000, which is still much less than other electric cars at the moment. The Model Y is fairly affordable from Tesla Its price starts at over $30,000, but it is still affordable for many consumers even in the United States.
Just 66 hours after launching pre-orders, the VF 3 now has nearly 30,000 customer orders. This uptick in demand is a great sign for the company and likely why the stock has skyrocketed this week.
Be careful with this stock
Despite strong brand momentum, VinFast Auto is a treacherous stock that investors should be wary of. In 2023, it lost $2.4 billion on revenue of $1.2 billion, which is a big hole to get out of. It's burning cash fast and will need to scale its automotive operations to reach profitability. With intense competition in the electric vehicle space, this will be a difficult task, and its success will be highly uncertain.
We've seen this story before with other electric vehicle startups like… Rivian Cars, Lucid MotorsAnd Fisker. The auto industry is a competitive field with legacy players hitting the EV space, large pure-play companies like Tesla playing a big role, and the looming supply coming from Chinese EV brands. Although VinFast has some momentum, it's hard to say why anyone should own the stock right now, especially given how unprofitable its core business currently is.
Should you invest $1000 in VinFast Auto Ltd. now?
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Brett Schiffer He has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has Disclosure policy.
Why VinFast Auto Stock Soared Higher This Week Originally published by The Motley Fool