– Vietnamese electric car maker VinFast’s merger with Black Spade Acquisition Company has raised concerns about the validity of the valuation and lack of pricing and liquidity in VinFast shares.
– The merger has all the hallmarks of a backdoor listing, with the chair of VinFast controlling 99% of the newly listed company, which raises questions about the legitimacy of the deal.
Once again, the stock market’s equivalent of a magic trick has been pulled. Vietnamese electric car maker VinFast recently made headlines with its dazzling merger with Black Spade Acquisition Company, a deal that skyrocketed the company’s market capitalization to a whopping $85 billion. That’s actually more than Ford and GM, if you believe the headlines. But let’s stick a pin in that balloon before the party gets out of hand.
You see, this merger isn’t as simple as it appears. Rather, it’s akin to a backdoor listing with a hollow paper company. Think of it as sneaking in through the kitchen of a swanky club because the bouncer at the front didn’t think your shoes were shiny enough. The stock price? It’s a random number on your screen, reminiscent of a slot machine in Vegas.
The deal has raised some eyebrows, specifically around the validity of the valuation and the lack of pricing and liquidity in VinFast shares. It’s like a cloudy day at the beach – you can still get a tan, but something just doesn’t feel right.
Now, let’s talk about SPACs, or Special Purpose Acquisition Companies. Once the darling of the stock market world, they’re now more akin to the embarrassing uncle no one wants to sit next to at Thanksgiving. These blank-check firms have a reputation for merging with subpar companies at exorbitant valuations, leaving investors with a bad taste in their mouths. It’s like paying a fortune for a fancy meal, only to find out you’re dining on frozen fish sticks.
Despite this, VinFast seemed to defy the SPAC-sceptics with its merger with Black Spade. The stock jumped on its Nasdaq debut, and suddenly VinFast was riding high, with a market cap even sweeter than sugar. However, this is where the plot thickens. The chair of VinFast controls 99% of the newly listed company. That’s not an aside, that’s the whole novella in one sentence.
In fact, VinFast’s listing has all the hallmarks of a backdoor listing into an empty listed shell, the stock market’s equivalent of a haunted house. It’s a sketchy practice that conjures up images of dodgy companies bypassing the national regulator to list on the stock exchange. This makes the line between a legitimate backdoor listing and a questionable reverse merger as thin as the plot of a bad soap opera.
But in the end, what’s the harm, right? After all, VinFast gets more than just a stock market listing. The SPAC brings money and an immediate path to liquidity. But in all this fanfare, let’s not forget the real risk. There is the concern that retail investors may buy VinFast shares in the mistaken belief that the stock price reflects the collective market judgment. With almost no market players validating the valuation, it’s like playing poker with a blindfold on. We can only hope the investors are not dealt a losing hand.
So, while VinFast may have performed a spectacular magic trick on the stock market stage, let’s not be too quick to applaud. The line between legit and foolhardy is starting to blur, and it’s the audience that might end up being played.