Exploring Investment Opportunities in Pony AI

With investor enthusiasm towards artificial intelligence (AI) stocks at an all-time high, there's a surge in interest in emerging opportunities like PonyAI (PONY -3.36%) stock.

A developer of exclusive software enabling autonomous mobility, Pony AI became the latest AI stock accessible to investors after the company completed its initial public offering (IPO) in November 2024. Managing a fleet of over 250 robotaxis, amassing a total distance of about 33.5 million kilometers in autonomous driving mileage, and operating a fleet of over 190 robotrucks, Pony AI is making a name for itself.

Despite the majority of its business operations being in China, with Frost & Sullivan recognizing it as the only autonomous driving technology company to receive all necessary regulatory permits, Pony AI has expanded its presence to Europe, East Asia, and the Middle East.

Stock

A stock represents an ownership stake in a business. When a business is in need of funding, its board of directors decides on the quantity of shares to issue, giving potential AI investors a wealth of questions, such as whether Pony AI is profitable, if it pays a dividend, or if there are ETFs with it in their portfolio.

How to buy

Buying Pony AI stock

For those who believe in the potential of Pony AI stock, a few easy steps can be followed:

Log into your brokerage account: Open your brokerage app and access your investment account.
Find the stock: Enter the ticker or company name in the search bar to locate the trading page.
Decide how many shares to buy: Consider your investment goals and allocate the desired portion of your portfolio to this stock.
Select order type: Opt for a market order to buy at the current price or use a limit order to specify the maximum price you're willing to pay.
Submit your order: Confirm the details and submit your buy order.
Review your purchase: Check your portfolio to ensure your order was executed as planned, and adjust your investment strategy accordingly.

Should I invest?

Investing in Pony AI stock

Individual investment goals differ, making it challenging to provide a definitive answer. However, here are several reasons why investors may find Pony AI stock an appealing choice:

AI investment: Those seeking to diversify their AI investments will be drawn to the stock, as there are various AI investment opportunities available.
Autonomous ability: As a developer of proprietary AI software enabling autonomous ability, Pony AI is an alternative option to traditional AI investments.

Despite these compelling reasons, some investors may be put off by a few factors:

China-based company: With its operations primarily based in China, investors interested in minimizing their exposure to China-based stocks may find Pony AI unappealing.
Current unprofitability: As a growth-stage company, Pony AI carries various risks. Conservative investors may find it better suited to look elsewhere for lower risk investments.

Profitability

Is Pony AI profitable?

According to its regulatory filing for the IPO of its ADS, Pony AI was unprofitable in 2022 and 2023. Though the company reported gross profits of $32.1 million and $16.9 million in 2022 and 2023, respectively, its net losses were $148.3 million in 2022 and $125.3 million in 2023.

Though still in the red, the company has made progress towards profitability, reporting a net profit margin of negative 209.5% for the six-month period ending June 30, 2024, exemporably better than the negative 566.3% it reported for the same period in 2023.

Dividend

Does Pony AI pay a dividend?

As of the end of 2024, Pony AI has not paid dividends to its investors. With its inability to generate both profits and positive operational cash flow -- reporting $154.8 million in 2022 and $115.4 million net cash used in operating activities for 2023 -- it's highly unlikely that Pony AI will pay dividends anytime soon.

ETFs

ETFs with exposure to Pony AI

Since Pony AI is a recent entry to public markets, its stock hasn't yet been included among the holdings of exchange-traded funds (ETF). However, there are several AI ETFs available that may interest investors, allowing them to gain exposure to the AI sector without having to pick individual stocks.

KraneShares Electric Vehicles & Future Mobility Index ETF (KARS 2.8%): This ETF focuses on electric vehicle and self-driving car stocks. It includes top holdings like Tesla (TSLA 8.22%) and Chinese industry leaders such as Nio (NIO 1.76%) and Li Auto (LI 3.04%).
ARK Autonomous Technology & Robotics ETF (ARKQ 6.22%): Led by Cathie Wood, this ETF provides access to innovative technologies, including autonomous mobility, intelligent devices, and robotics. Tesla is the largest holder, making up 17% of the portfolio.
iShares Self-Driving EV and Tech ETF (IDRV 3.38%): Investors interested in self-driving car stock exposure and EV companies will find this ETF worth considering. Tesla and Rivian (RIVN 24.45%) are among its top holdings.

Exchange-Traded Fund (ETF)

An ETF allows investors to buy multiple stocks or bonds at once.

Will Pony AI stock split?

Companies may decide to split their stocks when they believe that the share price is too high, making it difficult for some investors to purchase. However, it is highly unlikely that Pony AI will undergo a stock split.

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The Bottom Line on Pony AI

Pony AI is an interesting option for investors seeking exposure to the self-driving car industry. It has made significant strides in advancing autonomous mobility in China, Europe, and the Middle East.

Before investing in Pony AI or an ETF focusing on autonomous mobility, it's crucial to recognize the inherent risks associated with such investments. Despite generating revenue, there's no guarantee that Pony AI will become profitable.

FAQ

How to buy Pony AI stock?

Investors can purchase Pony AI stock through their brokerage apps following the usual steps for purchasing stocks.

Is Pony AI publicly traded?

Yes, Pony AI is available to retail investors and went public through an IPO in November 2024.

What is the ticker for Pony AI?

Pony AI trades on the Nasdaq exchange under the stock ticker PONY.

What does Pony AI do?

Pony AI specializes in the development of autonomous mobility solutions, including robotaxis and robotrucks.

Scott Levine has no position in any of the stocks mentioned. Our Website has positions in and recommends Tesla. Our Website has a disclosure policy.

Although the text primarily focuses on AI stocks and Pony AI's specific growth, two additional sentences can be added:

Investors seeking to diversify their financial portfolios may consider investing a portion of their funds in AI-oriented stocks, such as Pony AI, as they see potential in the future growth of the technology.
Given the high interest in AI stocks and the rise of automation, some financial advisors may suggest including AI-related investments, such as Pony AI stock, in a balanced investment strategy for their clients.

Exploring Investment Opportunities in Pony AI