To The Moon

VinFast Stock Soars More Than 50%. Here's What Is Going On.

Shares of Vietnamese electric vehicle maker $VinFast Auto(VFS)$   soared more than 50% Monday.

VFS rose 51.5% to close at $4.56. There wasn't any specific news or analyst upgrades to pin the gains on, but it looks like a confluence of events led to a monster one-day gain.

One factor appears to be Monday's rally in meme stocks. Those are shares of companies that don't always trade on fundamentals, but get pushed around by short-term traders.

Meme stocks $AMC Entertainment(AMC)$   and$GameStop(GME)$   rose more than 70% on a Twitter/X posting by "Roaring Kitty," a popular voice in the meme-stock movement who hadn't posted since 2021.

Meanwhile, high short interest is typically a prerequisite for a huge stock move. Short interest refers to the amount of stock borrowed and sold short by bearish investors betting on stock price declines. Typically, it is expressed as a percentage of shares available for trading.

The short interest in AMC is about 21%, according to FactSet. The number for GameStop and VinFast is about 24% and 15%, respectively. The average short interest for an S&P 500 stock is closer to 2%.

Along with a meme-stock effect, most EV stocks were rising in Monday trading, helped by shares of Chinese EV maker $ZEEKR(ZK)$  . The first day of trading for Zeeker's U.S.-listed American depositary receipts was Friday and the ADRs gained 35%. They were up another 2.8% Monday.

Sometimes strong performance by one stock in a sector can bleed over into other shares in the same sector. Rival EV makers $Rivian Automotive, Inc.(RIVN)$  and $Lucid Group (LCID.US)$ were gaining, too, up 9.1% and 5.6%, respectively, on Monday.

However, VinFast's big gains still leave the stock down about 50% year to date. More competition and slowing demand growth for all-battery electric vehicles have weighed on investor sentiment.

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