On Wednesday, VinFast Auto Ltd. (NASDAQ:VFS) experienced a reduction in its stock price target from $8.00 to $5.00 by BTIG, although the firm continues to endorse the stock with a Buy rating. The adjustment follows VinFast's first-quarter financial report, which revealed revenue of approximately $303 million, falling short of the expected $468 million. The reported revenue also did not meet BTIG's own estimate of roughly $496 million. This shortfall was attributed to the impact of the Lunar New Year in Vietnam, which led to fewer electric vehicle (EV) deliveries.
VinFast's EV deliveries in the quarter amounted to about 9.7 thousand units, marking a decrease of around 28% from the previous quarter. However, when compared year-over-year, the deliveries have surged by approximately 444%. Despite the year-to-date stock price decline of around 67%, VinFast's management has reaffirmed its full-year 2024 target of 100,000 EVs. The company anticipates a heavier concentration of deliveries in the second half of the year, estimating 30% in the first half and 70% in the latter half, aligning with the introduction of vehicles in new markets and the ramping up of production capabilities.
In the United States, VinFast currently has two active dealerships out of a total of 16, with these two dealerships delivering around 159 VF (NYSE:VFC) 8 models during the quarter. The company aims to expand its U.S. dealership network to approximately 32 active dealers by the end of the second quarter of 2024 and further increase this number to around 70 by year's end. This expansion plan includes the onboarding of additional dealers that are currently in the pipeline.
The company's e-scooter sales also saw a decline, with approximately 6,600 units sold, representing a 73% decrease sequentially and a 32% drop year-over-year. Looking ahead, VinFast's management is focusing on enlarging its dealer network in North America and launching EVs into new international markets such as Indonesia, India, and Thailand. Moreover, the company is dedicated to establishing its manufacturing facility in India by 2026, with a projected capacity of 50,000 units per year. This move comes in response to the Indian government's initiative to lower import duties for foreign auto manufacturers who commit to investing at least $500 million in setting up factories within the next three years.
InvestingPro Insights
As VinFast Auto Ltd. (NASDAQ:VFS) navigates its expansion and production targets, the latest data from InvestingPro shows a company that is aggressively growing but also facing significant financial challenges. With a market capitalization of $7.18 billion and a substantial revenue growth of 91.85% for the last twelve months as of Q1 2023, VinFast is indeed making strides in increasing its sales. This aligns with analysts' expectations of sales growth in the current year, which is a positive signal for potential investors.
However, the company's aggressive growth has come with a cost, as evidenced by a gross profit margin of -46.07% and an operating income margin of -134.95% for the same period. These numbers suggest that despite increasing revenues, profitability remains elusive, with the company not expected to be profitable this year. The stock's performance reflects these challenges, trading near its 52-week low and having experienced a significant price drop over the last six months.
For prospective investors, these metrics underscore the importance of closely monitoring VinFast's ability to manage its cash burn and improve its profit margins. For more in-depth analysis and additional InvestingPro Tips, such as the company's liquidity concerns and analysts' revised earnings expectations, visit https://www.investing.com/pro/VFS. There are 18 more InvestingPro Tips available to help you make an informed decision. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering a comprehensive understanding of VinFast's financial health and market position.
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