• Shares in Pony AI tumbled from more than $20 to $4 and then rebounded toward $10.
• The company’s latest report revealed a 30% drop in revenue, highlighting the challenges of scaling operations.
• Its valuation isn’t “cheap,” but analysts remain decidedly bullish. 

Stock in Pony AI (PONY) has had quite a ride in 2025. After peaking at more thn $20 per share in February, it tumbled to the low teens and then hit a 52-week low of just over $4. It was tossed about by a combination of weak earnings and concern about tariffs. But a breakthrough in its robotaxi platform sparked a rebound—pushing the stock back toward $10 per share. This high level of volatility offers a complicated proposition for investors—one that could see big rewards but not without significant risk. Today, we’ll delve into the company’s strategy and examine its financial position to determine whether the recent sell-off presents an attractive buying opportunity. 

At the intersection of AI, robotics and transportation

Pony AI, a key player in autonomous mobility, has a global presence spanning both the U.S. and China. The company was started in 2016 and in Silicon Valley and has built a strong operational base in China. It helps that the Chinese Communist Party granted regulatory approval for it to test and deploy robotaxi services in major cities, such as Beijing, Guangzhou and Shenzhen. These bustling urban centers are central to the company’s strategy and it has capitalized on China’s supportive regulatory environment while introducing innovative transportation to some of the world’s most densely populated cities.

Pony AI develops and deploys autonomous vehicles, primarily robotaxsi and robotrucks. Unlike some of its competitors, the company owns and operates its own fleet of autonomous vehicles instead of simply manufacturing them for customers. It has already started offering robotaxi services in Beijing and Guangzhou and plans to expand rapidly in China’s largest cities and eventually into international markets. The company has already secured testing permits in Europe and South Korea. 

Technologically, Pony AI sets itself apart with its proprietary virtual driver platform and its innovative PonyWorld simulation. This advanced system, built using reinforcement learning, enables the company’s autonomous vehicles to learn and adapt to a wide variety of driving conditions. The company’s strategic partnerships with major automotive OEMs, such as Toyota (TM) and the Guangzhou Automobile Group, bolster its potential by offering manufacturing expertise and allowing the company to focus on tech development without shouldering the capital burden of vehicle production.

Positioning itself at the crossroads of AI, robotics and transportation, Pony AI aims to become as ubiquitous as Uber. But the company still has to clear some hurdles before it can realize that vision. Earnings reports have shown progress is slower than some investors had hoped, highlighting the gap between its ambitious goals and the pace of scaling to meet them.

Disappointing earnings overshadow positive developments

Shares in Pony AI have struggled over the past two months, primarily because its recent earnings report missed expectations. In the final quarter of 2024, revenue dropped nearly 30% year-over-year, with robotaxi services revenue plummeting around 60%. This decline was largely because of the timing of project-based revenue recognition, which resulted in a delay in posting expected income and a decrease in service fees from engineering contracts. While the robotruck division continued to grow, it wasn’t enough to offset the overall decline in revenue. The company’s gross profit also fell sharply, and its net loss expanded to $181 million.

In response to the poor earnings report and an increasingly uncertain geopolitical landscape caused by Trump’s tariffs, shares in Pony AI recently dropped to a 52-week low of just over $4 per share. However, the company announced some key developments on April 23, which helped fuel a rebound in the stock. On April 28, the stock rallied by more than 40%. As part of its latest corporate update, the company unveiled its next-generation robotaxi platform at the Shanghai Auto Show, while simultaneously sharing some compelling advances in autonomous driving technology. These included a 70% reduction in bill-of-materials costs, an 80% decrease in autonomous driving computation costs and a 68% reduction in solid-state LiDAR expenses. 

Mass production of Pony AI’s next-generation robotaxis isn’t expected to start until mid-2025, meaning revenue from these innovations will take time to materialize. As such, the company remains unprofitable, and scaling its operations will require considerable capital investment. To raise the money, it may have to issue additional shares, even though that could add to bearish sentiment. 

Geopolitical risk, including continuing tariffs, have added an a layer of complexity to the company’s outlook, contributing to the bearish sentiment that drove shares to a 52-week low. However, with the stock more than doubling from its 52-week low and the market cap rising to about $3.5 billion, a key question remains: Are shares of Pony AI attractive at current levels?

A pricey bet on autonomous driving

Pony AI presents a challenging case for investors, especially in light of the latest earnings report. The company is in the early stages of its commercial journey, and it shows promise with its cutting-edge autonomous driving technology. But its financial metrics paint a mixed picture. The stock’s elevated valuation also stands in contrast to the company’s unprofitability, creating a complex situation for investors trying to assess the stock’s true value.

Some key valuation metrics suggest investor expectations are extremely high. The company’s forward price-to-sales (P/S) ratio is 28.7, significantly above the sector median of 2.6. This indicates investors are pricing in substantial future growth, which is typical for early-stage companies in emerging sectors like autonomous mobility. However, this elevated P/S ratio also shows investors are paying a premium for future sales that have yet to materialize. The enterprise value-to-sales (EV/S) ratio of 20.4 is also well above the sector average of 2.5. A high EV/S ratio generally suggests the market places a strong value on the company’s sales potential, but it also raises concern about whether investors have factored in too much optimism without clear evidence of a path to profitability.

Pony AI’s price-to-book (P/B) ratio is 2.6, slightly lower than the sector median of 3.1, indicating that the market isn’t assigning a significant premium to its assets compared to its peers. While this may seem more reasonable in light of the company’s other valuation multiples, the lower P/B ratio doesn’t offer enough of a buffer against the elevated sales and enterprise valuations, which could exert downward pressure on the stock if revenue growth continues to disappoint. 

Despite its lofty valuation, analyst sentiment around Pony AI remains decidedly bullish. All five analysts covering the stock have rated it as a “buy” or “overweight”—a common stance for high-growth companies, even those with steep valuations and ongoing losses. What stands out, however, is the average price target of $20 per share, significantly higher than the stock’s current price of $10. This strong vote of confidence appears to reflect analysts’ belief that Pony AI’s technological advancements will eventually drive substantial returns, positioning the company for significant upside once it overcomes near-term hurdles.

Investment takeaways

Pony AI is the definition of a high-risk, high-reward play. With sky-high forward P/S and EV/S ratios, the market is clearly betting on the company’s potential to lead the charge in autonomous driving. Yet, the reality is that the company is still unprofitable, and its ability to scale quickly remains in question. That leaves a lot of uncertainty hanging in the air. Despite these challenges, analysts are extremely bullish, assigning an average price target of $20 per share—roughly double the stock’s current price of $10. 

Investing in Pony AI hinges on your view of autonomous driving and your appetite for small-cap tech stocks. If you’re confident in the future of autonomous vehicles, the recent price drop could be a chance to buy in at a discount, though it’s important to acknowledge the road to profitability may be longer and bumpier than expected. Conversely, more cautious investors may choose to wait for clearer signs of growth and operational success, even if that means paying a higher price later. In the end, Pony AI’s stock represents a bet on whether its ambitious vision can be realized—and the outcome is far from certain. 

Andrew Prochnow, Luckbox analyst-at-large, has more than 15 years of experience trading the global financial markets, including 10 years as a professional options trader.

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