Pony AI (PONY) shares were under immense pressure on March 26 after the company said its sales crashed to $29.1 million in Q4, even as the robotaxi segment revenue went up a remarkable 160%.
Investors seem to be grappling with a fundamental issue: PONY’s core robotaxi unit is accelerating, but its path from per-vehicle profitability to company-wide sustainable earnings remains long and capital-intensive.
Year-to-date, PONY stock is now down about 40%, but a senior Bank of America analyst remains convinced that its trajectory moving forward will be a different one.
BofA Sees Upside in PONY Stock to $19
In a post-earnings research report, BofA analyst Ming-Hsun Lee recommended buying the dip in PONY shares, asserting the market is overlooking the firm’s long-term leadership in autonomous vehicles (AV).
According to him, the heavy R&D spending, while hurting margins in the near term — down 8.2% in the fourth quarter — is a necessary entry fee for a winner-takes-all market.
Lee remains bullish on PONY’s strategic partnership with Toyota for mass-producing Gen-7 robotaxis, viewing it as a critical moat that will lower hardware costs over time.
Meanwhile, the company’s $1.5 billion cash cushion offers ample runway to navigate the ongoing valuation reset in the tech sector, he added.
Bank of America’s “Buy” rating on the robotaxi specialist comes with a $19 price target, indicating nearly 2x potential from here.
Why Else Are PONY Shares Worth Buying
Beyond massive growth in robotaxi revenue, PONY’s earnings release offered several indicators of operational strength.
Most notably, the company’s fare-charging revenue more than quadrupled on a year-on-year basis as it transitioned from testing to a true commercial model.
PONY stock is worth buying also because the firm achieved unit economics breakeven in major tier-one cities like Guangzhou and Shenzhen.
This means that once fixed costs of the AI “brain” are covered, its individual taxi units are already profitable on a per-ride basis, a crucial step toward overall corporate profitability by 2026.
PONY’s recent partnership with Uber (UBER) is among other major reasons to stick with it.
How Wall Street Recommends Playing Pony AI
Interestingly, BofA is among the more conservative Wall Street firms on China-based Pony AI.
The consensus rating on PONY shares sits at a “Strong Buy,” with the mean price target of nearly $23 signaling potential upside of nearly 140% from here.
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