One of the standouts of today's afternoon trading session has been VinFast Auto, which logged a -3.5% drop and underperformed the S&P 500 by -4.0%. The Blank Checks stock is now trading at $3.71 per share and is -56.29% below its average target price of $8.5. Analysts have set target prices ranging from $5.0 to 13.0 dollars per share, and have given the stock an average rating of buy.
We can use VinFast Auto's short interest as a proxy for determining general market sentiment regarding the stock. The short interest is the percentage of the share float that represents short positions, meaning that the investor believes the stock will decline in the future. Since VFS's short interest is 6.9%, the market sentiment is mixed on this stock.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
One measure of the market sentiment regarding a stock is its rate of institutional ownership, which in the case of VinFast Auto stands at 0.2%. This indicates a lower than average rate of institutional ownership -- but what does that have to do with sentiment regarding the stock?
The reason we look at institutional ownership is that institutions such as hedge funds, pension funds, and mutual funds have vast research capabilities. They are often close to management, speaking to them one-on-one and gaining an understanding of the opportunities and challenges they face. Thus, if an institution is willing to place their capital in a company, it's likely that their due diligence has shown it is a safe bet.
To sum up, VinFast Auto is probably the subject of positive market sentiment because of an analyst consensus of strong upside potential, a buy rating, an average amount of shares sold short, and a very small number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about VFS:
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The stock has trailing 12 month earnings per share (EPS) of $-0.99
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VinFast Auto has a trailing 12 month Price to Earnings (P/E) ratio of -3.8 compared to the S&P 500 average of 28.21
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VinFast Auto is a Finance company, and the sector average P/E and P/B ratios are 19.48 and 1.85 respectively
