Why Pony AI Stock Popped on Tuesday

Key Points

• An analyst at an influential financial services company uppped his price target on the shares.

• He also maintained his buy recommendation.

• 10 stocks we like better than Pony Ai ›

Chinese autonomous driving tech company Pony AI (NASDAQ: PONY) motored well higher on the stock exchange Tuesday. On the back of a fresh analyst update, investors crowded into the stock to leave it with a gain of nearly 4% the trading session. That contrasted with the trajectory of the benchmark S&P 500 index, which moved in reverse with a 0.6% decline on the day.

Ramping up service hours and road testing

Well before market open, Goldman Sachs prognosticator Allen Chang boosted his Pony AI price target by 13%. In his opinion the stock is now worth $27.70 per share, up from his previous level of $24.50. Chang maintained his buy recommendation, which is sensible given that the new fair value assessment is nearly 30% above the company's latest closing price.

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Image source: Getty Images.

The latest developments announced by Pony AI are the key factors in the analyst's move, according to reports. The Goldman Sachs pundit pointed out that the company has started road testing its Gen-7 robotaxi in the major Chinese cities of Beijing, Guangzhou, and Shenzhen. Additionally, in certain markets where its service is live, Pony AI has expanded operating hours from 15 per day to a full 24.

Chang also mentioned that the company began full commercial service in Pudong, a busy district in the country's most high-profile city, Shanghai.

Self-driving success

Given these advancements in commercialization, Chang feels that Pony AI has more than a chance to increase its gross merchandise value (GMV) per robotaxi. That, combined with its ambition to grow its fleet to 1,000 vehicles by the end of this year, bodes well for growth in the fundamentals.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.