Why Pony.ai Stock Is Skyrocketing Today

Shares of Pony.ai (NASDAQ: PONY) are flying higher on Monday. The company's stock rose 40.2% as of 12:16 p.m. ET today. The move comes as the S&P 500 lost 0.8% and the Nasdaq Composite lost 1.3%.

A key big-tech partnership

The company, which develops self-driving technologies, announced a new partnership with Tencent Holdings, a large Chinese tech company headquartered in Shenzhen. Pony.ai will integrate its autonomous robotaxi services into Tencent's Weixin Mobility Services platform and Tencent Maps.

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A boost for the company's profile

The deal validates the company's technology, demonstrating its usefulness to a company as powerful as Tencent. The collaboration will likely help Pony.ai gain more clients and drive revenue growth. It also benefits from exposure to Tencent's tech ecosystem, whose advanced cloud computing, big data, and artificial intelligence muscle will enhance Pony.ai's platform and help refine its models.

The business is currently bleeding cash and has fairly meager revenue. Last quarter, it lost roughly $180 million on $35 million in sales.

These numbers look concerning, but they're not unusual for a relatively young company still proving its technology. It is well funded and has a strong balance sheet with nearly $750 million in cash on hand.

The new partnership will undoubtedly help it move toward profitability. For those with patience and a higher risk tolerance, I think Pony.ai could pay off.

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Johnny Rice 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.