To The Moon

$Pony AI Inc(PONY)$ is expected to release its quarterly earnings result for Q4 2024 on 25 March 2025 before the market open.

Pony AI now has a market capitalization of roughly $8.3 billion and is valued at approximately 91 times this year's expected sales.

On 21 February, Pony AI Inc. announced the launch of paid robotaxi services across multiple locations and routes in China. PONY emphasized that it is the first and only provider approved to operate robotaxi services on these high-demand routes. Investors reacted positively to the news, driving the stock up 32% on the announcement day.

But the gains did not last after two trading sessions, PONY gave back the gains and cause its YTD returns to be only 12%.

For this quarterly earnings, the consensus estimate for earnings per share is expected to be at a loss of 28 cents.

Pony AI (PONY) Earnings Decline A Concern To Address

Pony AI's earnings have been declining at an average annual rate of -22.6%, while the Software industry saw earnings growing at 19.8% annually. Revenues have been growing at an average rate of 16.6% per year.

According to PONY, the majority of growth in robotaxi revenue can be attributed to autonomous driving technology and services it sells in South Korean market. A smaller part of it came from passenger fares from robotaxi services in the three tier-one cities

Pony is already the leading robotaxi company in China, with operations in four tier-one cities, but questions remain about the company’s post-IPO international expansion plan. Pony now has research centers in Silicon Valley and Luxembourg, and potential operations in Hong Kong, Singapore, South Korea, Saudi Arabia, UAE, and Luxembourg.

Can these overseas expansions help to push PONY earnings better as the competition on the robotaxi sector is also heating up globally?

Factors That Could Affect Pony AI (PONY) Q4 2024 Earnings Result

Industry Trends and Competition

Growth Stage: The autonomous vehicle sector is likely still in development by 2024, with limited full commercialization. Pony AI may be focused on pilot programs or niche deployments rather than mass-market adoption.

Competitive Landscape: Competing with firms like Waymo, Cruise, and traditional automakers could pressure margins and market share, potentially affecting revenue growth.

Revenue Streams

Partnerships/Deployments: Earnings may hinge on strategic partnerships (e.g., with Toyota or ride-hailing platforms) or regional deployments. Expansion into new markets or securing fleet contracts could boost Q4 revenue.

Licensing/Tech Sales: Revenue from licensing autonomous driving systems to manufacturers or logistics companies might contribute, depending on adoption rates.

Regulatory Environment

Regulatory Approval: Progress in key markets (e.g., U.S., China) could enable broader testing/commercialization. Regulatory easing in late 2024 might accelerate revenue recognition.

Technological and Operational Factors

R&D Costs: High R&D expenses could offset revenue, leading to net losses if the company prioritizes innovation over monetization.

Supply Chain: Resolution of semiconductor shortages or cost reductions in sensor tech might improve margins.

Economic and Market Conditions

Investor Sentiment: Favorable tech investment trends could provide capital, but economic downturns might restrict funding or delay partner investments.

Strategic Milestones

Key Announcements: A major partnership or technological breakthrough (e.g., Level 4 autonomy certification) in late 2024 could positively surprise earnings.

Pony AI (PONY) Price Target

Based on 3 Wall Street analysts offering 12 month price targets for Pony AI Inc. Sponsored ADR in the last 3 months. The average price target is $19.20 with a high forecast of $20.00 and a low forecast of $18.00. The average price target represents a 51.06% change from the last price of $12.71.

Technical Analysis - Exponential Moving Average (EMA)

PONY have suffered from the recent selloff in the tech stocks, and this might change as we are seeing rebounce forming in the tech sector, from the RSI which is showing a weak momentum as it trend towards the oversold region.

But if we looked at how the RSI is forming a potential crossover with RSI MA, this could signal a bullish reversal ahead of its earnings tomorrow (25 Mar) before market open.

If PONY could move towards its 50-day period at around $14.50, then we could see a daily uptrend, and the bulls might attempt for an expansions if that happen, this could move PONY back around the $16 dollar level.

Here are the factors that could propel PONY post earnings as we need to see steady progress with moderate revenue from pilots/licensing, offset by ongoing R&D costs, resulting in modest losses.

Bull Case: Successful deployment in new regions, regulatory approvals, and reduced costs lead to higher-than-expected revenue with narrowing losses.

Bear Case: Regulatory hurdles, competition, or funding challenges lead to missed targets and deeper losses.

Summary

Pony AI's Q4 2024 earnings are likely to reflect a balance between incremental revenue growth from strategic initiatives and significant R&D expenditures.

Profitability may remain elusive unless a major commercialization milestone is achieved. I think as investors we need to be aware that robotaxi competition is heating up and competitive advantage would be in play.

Appreciate if you could share your thoughts in the comment section whether you think PONY could beat the expectations with strategic partnership in its overseas expansions.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.