Though the thin 2023 rally is fading quickly, euphoric sentiment is still abounding with amateur investors – people continue to buy into their favorite tech mega-caps, AI plays show periodic cadaveric spasms, and pump’n’dump schemes in foreign electric vehicle (EV) reverse-merger stock (SPACs) plays still attract money from eager amateurs and meme-stock riders anxious to not miss out.
VinFast Auto (ticker VFS), the shining star of the Vietnamese EV realm, and now the poster child for SPAC absurdity, has become the latest testament to this market still being far from healthy, in a spectacle of financial comedy.
Just a mere blip on the stock market radar, VinFast boldly went public in the US via a SPAC merger on mid-2023. Just a couple of months later, we now find ourselves marveling at the mark-up of the stock by insider institutions and the gullible public buying into the top – buy high, sell low. Check out the chart below.
Market euphoria by the public can easily be used by a syndicate of large institutional players that own/ accumulated the stock during the underwriting process, private placements or offerings to now mark the stock up to staggering heights, with the combined help of a network of investment banks, brokers and engineered media buzz.
If sentiment is right, there will be hopeful buyers, whatever trash it is you’re selling. Of course, the inside holders know that such high prices are not sustainable – they take their gigantic profits selling into the melt-up to the gullible amateurs who have dollar signs in their eyes and rocket logos in their investment logbook.
Astute observers could witness an 825% ascent in a mere 21 trading days on from July 28, temporarily giving VFS – who had at that point not sold more than a few hundred cars – a market cap over five times that of General Motors!
Of course, when a stock has fulfilled its purpose, i.e. making mountains of money to its large holders, the trend is over. And over it was – within 37 trading days, the stock price collapsed a whopping 94%, dragging the market cap down to a still ridiculously exaggerated $17 billion.
Apparently, the EV and SPAC theme has not run its course yet since we’ve witnessed the likes of all-but-totally-collapsed Lucid Group (LCID), Rivian (RIVN, losing $30k on each car they’re selling for the sake of a ‘green’ future), Arrival (called off), Proterra (PRTA, bankrupt), Volta (VLTA, bankrupt), EV Go (EVGO), Chargepoint (CHPT), Fisker (FSR) and many more, including the the infamous Nikola (NKLA, bankrupt).
The shown trading history of VFS is enough to repulse any stock speculator worth their salt, but not the average retailer – what can go up once may go up again, they rationalize. The management of VFS is fully aware of this, openly admitting that they are planning to extract more money for their venture from the idiotic public via future secondary offerings. Why fight with risk-averse institutional managers over fundamental numbers when you can just sell your stock to the meme-stock asylum?
Remember, as long as we see such events unfold, the market will stay unhealthy, late-stage and euphoric. A proper ‘cleansing’ and washout of FOMO retailers and money managers is needed, and obviously the 2022 sell-off was not sufficient for that.
