Why Pony AI Stock Crushed the Market Today

Key Points

• A pundit with his eye on the autonomous driving segment initiated coverage of the company.

• He flagged it as a buy.

• 10 stocks we like better than Pony Ai ›

Autonomous driving stock Pony AI (NASDAQ: PONY) can't, of course, drive its own stock higher at will. Investors sure can, however, and they did so robustly on Monday. On a rather encouraging news item from the world of stock punditry, they ended up pushing Pony AI's shares more than 7% higher in price during today's trading session. With that kind of performance, it left the S&P 500 index's 0.3% rise in the dust.

Ride the Pony, says analyst

This morning, well before market open, sprawling U.S. bank Citigroup initiated coverage of Pony AI stock.

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Image source: Getty Images.

Happily for the company and its investors, Citi analyst Jeff Chung launched coverage with an unambiguous buy recommendation at a price target of $29 per share. Even after the pop following the news, that level is nearly 28% higher than Pony AI's market price.

The pundit wrote in his inaugural note on the self-driving car tech specialist that the robotaxi segment of this market is at an inflection point, according to reports.

He's especially bullish on the future of robotaxis in China, a major target market for Pony AI. He forecast that robotaxi penetration will rise from an anticipated 0.1% this year to a full 9% in 2030, then increase significantly to 30% five years later.

Take a ride with a peer too

Chung is generally optimistic about self-driving cabs in China. In addition to Pony AI, he initiated coverage of its peer WeRide with a buy at a price target of $15.50 per each of the company's American depositary receipts (ADRs). Of the two operators, WeRide is the one actually headquartered in China, specifically in the city of Guangzhou.

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Citigroup is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.