Why Pony AI Stock Keeps Racing Higher

Pony AI (NASDAQ: PONY) stock just keeps on galloping. For the third day in a row, the small-cap Chinese robotaxi and robotruck company rode higher on Friday, building on huge gains Wednesday and Thursday. The stock tacked on another 22.7% through 9:40 a.m. this morning and now is up more than 120% over the past three days.

Yes, you read that right: Pony doubled, and then went up even more.

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Image source: Getty Images.

Pony express delivers good news

So far this week, the biggest little Chinese small cap you've never heard of (before this week) has announced it's producing three new robotaxi models in cooperation with Beijing Automotive Group, Guangzhou Automobile Group, and Toyota Motor (NYSE: TM), respectively, and that it has lined up local partner Hesai Group (NASDAQ: HSAI) to supply it with AT128 lidar sensors for its robotaxis.

Today, Pony added that it's partnering with another local company, Tencent Holdings (OTC: TCEHY), to further "advance autonomous driving technology and robotaxi commercial deployment."

This tie-up will pair Pony's "cutting-edge" autonomous driving system with tech products from Tencent, specifically the latter's Weixin (or "WeChat") social media, messaging, and payment app, Tencent Maps, and its "robust cloud computing, big data and AI infrastructure," all of which sound to me like logical add-ons to an electric-car-slash-robotaxi service.

Is Pony AI stock a buy?

Tencent might do well to ante up a bit of cash. Tencent's tech contributions are all great, but there's no mention of financial support in the press release, and Pony is still burning cash, and losing $274 million a year.

While the company has considerable cash reserves, a little more could go a long way to ensuring Pony stock doesn't go bankrupt before 2029, the first year it's expected to be profitable, according to analysts polled by S&P Global Market Intelligence. Meanwhile, until the financial picture firms up, I must still consider Pony a speculative, momentum-driven stock.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tencent. The Motley Fool has a disclosure policy.