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Vietnamese electric car manufacturer VinFast Auto and several executives have been hit with a proposed class action alleging they exaggerated the strength of VinFast's business model and prospects following a merger with a special-purpose acquisition company last year.

According to the suit filed by shareholder Meng Qian on Friday, VinFast completed a $27 billion merger with blank-check company Black Spade Acquisition Co. last August. Qian alleges the merger's offering documents, as well as statements VinFast made to investors, were false and misleading because they did not disclose that the company lacked sufficient capital to execute its purported growth strategy and would be unable to meet its 2023 delivery targets.

Qian claims the merger was overvalued due to the alleged misrepresentations. Shares of VinFast declined when news outlets, analysts, and the company itself acknowledged VinFast's financial struggles, the suit alleges.

In addition to VinFast, the suit's individual defendants include VinFast's founder and CEO Pham Nhat Vuong, former CEO Le Thi Thu Thuy, former Chief Financial Officer David Mansfield, and four others who signed the registration statement filed in connection with the merger in June 2023.

The class period begins Aug. 15, 2023, the day after the merger was completed. That day, VinFast's ordinary shares began publicly trading on the Nasdaq Stock Market, according to the suit. For several weeks following the company's debut, the defendants made misleading statements about VinFast's business, strengths, and long-term growth strategies, the suit claims.

For example, the suit states, the company said on Oct. 5, 2023, when announcing third-quarter financial results, that it expected to deliver between 40,000 and 50,000 vehicles in full-year 2023. On the same day, Mansfield told investors that VinFast had a "concrete action plan" to accelerate its global expansion, the complaint states.

Several days later, on Oct. 15, 2023, the market reacted negatively to an article regarding VinFast's growth outlook, the suit claims. Bloomberg reported that VinFast plans to "aggressively move'' into southeast Asian markets and expects to raise "a lot of capital" to fuel its global expansion strategy, the suit states. The company will rely on support from its parent company Vingroup JSC and its founder Vuong for the next 18 months, the article stated, according to the suit.

On this news, VinFast's shares declined $1.45, or 18%, to close at $6.53 per share on Oct. 16, 2023, according to the complaint.