FMP
VinFast Auto's Financial Challenges Amid Global Expansion
Oct 31, 2024 8:06 AM - Danny Green
Image credit: Google Images
- VinFast Auto (NASDAQ:VFS) reported an EPS of -$0.21 and revenue of $357 million, missing revenue expectations.
- The company's third-quarter deliveries rose by 66%, yet it postponed its North Carolina factory launch and reduced its delivery forecast.
- Financial metrics indicate challenges, with a negative P/E ratio of -3.65 and potential liquidity concerns highlighted by a current ratio of 0.32.
VinFast Auto, listed on the NASDAQ as VFS, is a Vietnamese electric vehicle (EV) manufacturer. The company is expanding globally, with a recent launch in the Middle Eastern market, showcasing its commitment to sustainable transportation. Despite its ambitious expansion, VFS faces financial challenges, as reflected in its recent earnings report.
On October 31, 2024, VFS reported an earnings per share (EPS) of -$0.21, aligning with expectations. However, its revenue of $357 million fell short of the estimated $418.9 million. This shortfall may be linked to the company's ongoing global expansion efforts, which have increased costs, as highlighted by Reuters.
VinFast's third-quarter deliveries rose by 66%, reaching 21,912 EVs, driven by strong domestic demand. In September, the company achieved its highest monthly delivery figures in Vietnam, with over 9,300 EVs delivered. Despite this growth, VinFast postponed its North Carolina factory launch to 2028 and reduced its delivery forecast by 20,000 units.
The company's financial metrics reveal challenges. VFS has a negative price-to-earnings (P/E) ratio of -3.65, indicating a lack of profitability. Its price-to-sales ratio is 6.76, and the enterprise value to sales ratio is 8.94, suggesting a high valuation relative to sales. The negative enterprise value to operating cash flow ratio of -5.85 highlights cash flow challenges.
VinFast's current ratio of 0.32 suggests potential liquidity concerns, as it may not have enough current assets to cover liabilities. The negative debt-to-equity ratio of -0.49 indicates more liabilities than equity. As government incentives for EVs decrease, VinFast is focusing on affordability and charging infrastructure to attract buyers.
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