There was one surefire approach to lose cash within the inventory market over the previous couple of years…
Shopping for into the hype about new electrical car (EV) shares has been pure poison for investor portfolios.
In June 2020, I warned buyers to remain far-off from heavy-duty electrical truck maker Nikola Corp. (Nasdaq: NKLA). My subject with Nikola was its inventory market valuation. The corporate had a $30 billion valuation however no income, no money move and no income!
Nikola’s inventory has since been a catastrophe, down a horrifying 98%.
After Nikola got here one other thrilling EV producer, Rivian (Nasdaq: RIVN).
Once more, its valuation was ridiculous.
In October 2021, simply earlier than Rivian went public, I urged readers to keep away from its inventory.
Rivian’s $70 billion-plus valuation didn’t match up with the truth that the corporate hadn’t generated any income or income!
Like Nikola’s, Rivian’s inventory has since collapsed, now down greater than 80%.
This week, I’m warning Rich Retirement readers about one other EV producer that the market has bid as much as a nonsensical valuation.
This time, although, the valuation is much more absurd.
The corporate is VinFast Auto (Nasdaq: VFS), which is a Vietnam-based producer of EVs.
VinFast began out as a producer of electrical scooters. From there, the corporate expanded into manufacturing electrical SUVs. It’s rising fairly quick, however thus far, the enterprise has carried out nothing however burn via money.
Essentially, VinFast has by no means turned a revenue. So far, the corporate has incurred a cumulative lack of $6 billion.
In opposition to that profitless existence, VinFast’s market valuation (enterprise worth) as I write this can be a staggering $166 billion! How can that be?!
For perspective, contemplate that VinFast is valued at the next enterprise worth than each Ford (NYSE: F) and Basic Motors (NYSE: GM).
Whereas VinFast has by no means posted a revenue, final yr alone, Basic Motors and Ford generated company-adjusted free money flows of just below $20 billion and $9 billion, respectively.
Final yr, VinFast delivered a grand whole of seven,400 EVs. This yr, the corporate hopes to see that quantity improve to 30,000. That’s good development, however for a enterprise valued at $166 billion… that may be a minuscule quantity.
For some perspective on how tiny that’s, Ford bought 4.2 million and Basic Motors bought 5.9 million automobiles final yr. Each of those firms bought extra automobiles daily final yr than VinFast did in your entire yr.
It’s unbelievable that the inventory costs of Nikola and Rivian have imploded, but the market is pushing one other EV maker as much as a ridiculous valuation. VinFast might grow to be a fantastic firm, however its inventory goes to come back crashing again to earth. This inventory must be promoting at a fraction of the place it at the moment is.
The Worth Meter charges VinFast as “Extraordinarily Overvalued.” And I don’t suppose “extraordinarily” does the overvaluation justice on this case.
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