VinFast Auto (NASDAQ: VFS) was an intriguing investment from the get-go. At a time when investors are flipping over every rock to find the next Tesla, VinFast dominated its home Vietnam market, offered compelling cost advantages, and had state-of-the-art production facilities, and a very wealthy backer and founder. The electric vehicle (EV) maker also had extensive plans to expand into Europe and the U.S. markets. The hype has faded, however, and recently investors seem to have been backing off. What's going on?

Brief recap

The biggest obstacle for investors was VinFast's recent weaker-than-expected quarterly results. Friday VinFast reported a second-quarter loss of $0.33 per share on sales of $357 million, which fell far short of Wall Street estimates calling for a $0.21 per-share loss on sales of $419 million. Compared to the prior year, VinFast's loss widened from a $0.24 per-share loss on sales of $328 million, putting sales growth at 9.1% year over year.

Elephant in the room

The biggest issue, perhaps, surrounds the company's full-year delivery estimates, which appear to be a tad aggressive currently. VinFast delivered 13,172 EVs during Q2, which brings the first half of 2024 up to roughly 22,000 deliveries. In a vacuum, these results look good: Q2 deliveries were up 43% year over year, and the first half of 2024 deliveries were a 101% increase compared to the prior year.

If investors want to take it one step further, it's worth noting that roughly 12,000 of the company's first-half sales went to related parties. Remember that VinFast's parent company VinGroup has its hands in many industries and uses VinFast EVs for taxi fleets that it owns. Management still expects to hit its estimate of 80,000 deliveries in 2024, which leaves roughly 58,000 vehicles to be delivered during the second half of the year. That appears to have investors concerned that sales growth might not increase fast enough to meet full-year estimates.

Weaker-than-expected Q2 results initially sent VinFast stock down nearly 8% Friday, but in fairness, trading has always been rocky with this EV company. In fact, VinFast stock has shed nearly 80% of its value over the past year and 56% in 2024 alone.

Going forward

For investors, the company's most important market and still a large driving force in its financial results is its home Vietnam market. Lan Anh Nguyen, chief financial officer, noted, "Q2 of 2024 aligned with our forecasts, driven in large part by the increasing demand for VinFast's EVs in Vietnam ..."