Why Pony.ai Stock Galloped From $4 to Nearly $20 in a Month

What Does Pony.ai Do?

Zacks Rank #3 company Pony.ai (PONY) is an up-and-coming leader in the rapidly growing autonomous driving technology industry. The Chinese-based company focuses on producing robotaxis for autonomous ride-hailing services, robotrucks for autonomous deliveries, and systems for individually-owned automobiles.

PONY is the Top Performer Since the Market Low

Price is king on Wall Street, and one of the best methods to determine momentum is through a relative price strength analysis. PONY exhibits RS in spades. In fact, the shares have exploded from $4.11 on April 22 to nearly $20 today!

Pony.ai Inks Uber, Toyota Partnerships

While Pony.ai is a relatively obscure and new company, it has already inked partnerships with two industry leaders. In its earnings call earlier this month, the company announced a partnership with rideshare leader Uber Technologies (UBER). PONY CEO James Peng touted the partnerships, saying, “We recently partnered with Uber, which will enable users to access our robotaxi service directly through Uber’s platform.” Meanwhile, late last month, the company announced that it has a deal with automotive juggernaut Toyota (TM) to begin mass production of its seventh-generation robotaxi lineup. The two deals provide Pony with two essential components: scale and distribution.

PONY CEO Announces Voluntary Lock-up Period

An IPO lock-up period is a legal agreement that stops early private shareholders and company insiders from selling shares of a company near the IPO to prevent low stock prices and protect retail investors. One of the pitfalls of trading IPOs over the past few years is that early private investors use a successful stock debut as a liquidity event to dump shares on public investors once the lockup period expires.

However, Pony.ai Chairman of the Board Dr. Jun Peng, and PONY co-founder and CEO Dr. Tiancheng Lou recently announced a voluntary lock-up period extending for 540 days beginning May 25. Though I have been involved in public markets for more than two decades, I have rarely, if ever, seen a voluntary lock-up period extension. This tells me that the upper-echelon management at Pony.ai has extreme conviction into the future.

PONY Carves “IPO U-Turn Base”

PONY shares are carving out a classic IPO U-turn base structure: the stock spikes higher, declines, and then rounds out a short, but powerful multi-week pattern.

CoreWeave (CRWV) is a recent example of just how powerful this pattern can be. The stock recently doubled in under a month after breaking out of a IPO U-turn base. Another example to study is Alphabet’s (GOOGL) IPO U-turn breakout shortly after its debut in 2004.

Pony is Tariff Immune

One of Wall Street’s biggest concerns currently is tariff uncertainty. That said, PONY’s management team has confirmed that much of the company’s supply chain is sourced locally and that the company is insulated from most, if not all, tariffs.

Bottom Line

Pony.ai shares are set to soar as the company’s stock shows strong momentum, strategic partnerships, and a highly unusual voluntary extended lock-up period by its founders.

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This article originally published on Zacks Investment Research (zacks.com).

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