Self-driving vehicle startups are all the rage. Goldman Sachs thinks newly public China-based autonomous driving firm Pony AI could be ahead of the curve. The firm initiated Pony AI with a buy rating and $19.60 price target, which implies nearly 43% potential upside ahead from Friday’s close. Its shares are up more than 5% this month as investors have piled into the stock since Pony AI debuted on the Nasdaq on Nov. 27 through an initial public offering, which raised approximately $260 million and priced the company at $13 per share. Goldman was one of the offering’s underwriters. Pony AI, which was founded in 2016, also placed $153.4 million of ordinary shares with an investor group, which brought the company’s value to $4.2 billion. PONY 1Y mountain Pony AI stock performance. Pony AI’s debut in the U.S. market comes as several self-driving car companies — namely Alphabet ‘s Waymo, Elon Musk ‘s Tesla and Amazon -owned Zoox — are racing to expand domestic operations and attain commercial viability. The company is already a standout name in China, according to Goldman, which expects it to become a major robotaxi service provider in the country by the end of 2030. “Pony AI is the leader in L4 autonomous mobility in terms of fleet size, offering robotaxi and robotruck services across China,” and is “early in commercialization” with its fully driverless robotaxis, analyst Allen Chang said in a recent note to clients. The company is also eyeing domestic expansion. CEO James Peng recently told CNBC that Pony AI’s growth in the U.S. market is “hugely important” and that diversifying the company’s supply chain and continuing its R & D efforts will be a major focus during President-elect Donald Trump’s administration. Pony AI currently operates 225 robotaxis and more than 190 robotrucks as of the first half of 2024, and has 124 robotaxis in operation. The company operates its entirely driverless robotaxis in China’s four tier-1 cities: Beijing, Shanghai, Guangzhou and Shenzhen. First-tier cities are generally understood as the country’s most developed and wealthiest cities, based on factors such as population and income level. Chang noted that Pony AI was granted regulatory permits to run its public-facing, fare-charging robotaxi services without safety drivers in Beijing in August 2023. The launch has been successful so far, as he said Pony AI’s robotaxi business continues to gain customer registrations via its PonyPilot+ mobile app, which allows users to summon a ride. “According to the road-testing reports issued by the municipalities of Beijing and Guangzhou, Pony AI’s vehicles exhibited safety metrics surpassing those of its local peers in China and outperforming human-driven cars,” Chang said. Chang expects Pony AI to grow revenue at a compound annual rate, or CAGR, of 27% between 2024 and 2027 as its robotaxi fleet scales up and the company begins earning a license fee from its vehicles. Between 2027 and 2030, the analyst forecasts a 158% CAGR.
