Jay Ritter

VinFast’s wild ride points to need for stock health warnings

In a remarkable stock debut via a special purpose acquisition company (SPAC), VinFast’s market capitalization shot higher after its mid-August listing to a peak of around $190bn. The stock has since slumped and the market value fallen to $64bn.

“Most SPACs weren’t planning on having a really tiny free float, but if there’s a really high redemption ratio, they wind up [there],” says Jay Ritter, Cordell Eminent Scholar at the University of Florida. “Small free floats can result in manipulation, but actually most of the time the fundamentals that led to the high redemptions scare away investors and the price collapses.” 

Read more in this story from the Financial Times. [Subscription required.]