Is There an Opportunity in Pony AI After the Recent 35% Price Surge in 2025?
Pony AI's stock surged 35.4% recently, but has seen a 14.3% decline in the past week. Despite a year-to-date gain of 33.6%, the company scores only 2 out of 6 on valuation checks, indicating mixed signals. A Discounted Cash Flow analysis suggests the stock is undervalued by 21.3%, with future cash flows expected to turn positive by 2029. The current price-to-book ratio is 8.4x, higher than industry averages, indicating a premium valuation. Investors are advised to consider these factors before making decisions on Pony AI stock.
Thinking about what to do with Pony AI stock right now? You are certainly not alone. After an impressive 35.4% surge over the past month, despite a more recent 14.3% slip in the last week, the conversation has started to shift. Is this just market volatility, or do these moves signal something more significant about the underlying business and its prospects? The strong year-to-date gain of 33.6% has really caught investor attention, hinting at renewed optimism around autonomous vehicle tech and possible shifts in risk perception as regulators and partners show more openness to this space.
But before making any decisions, it is worth taking a closer look at the numbers. Based on our multi-check valuation model, Pony AI scores a 2 out of 6 for being undervalued. In other words, it is undervalued in just two of the six core areas we track. This is a mixed signal that suggests some upside, but also room for caution. Of course, no single model tells the whole story.
Let’s break down these different valuation approaches and see what they reveal. And stay tuned, because there is an even more intuitive way to frame whether Pony AI is truly a deal. This is the sort of angle that could change the way you think about this stock entirely.
Pony AI scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Pony AI Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow (DCF) model is one of the most widely used ways to estimate what a company is truly worth. It projects all the cash Pony AI is expected to generate in the future and then discounts those amounts back to present-day dollars to account for risk and the time value of money.
Looking at Pony AI, the latest twelve-month Free Cash Flow is negative $139.98 Million. Analysts forecast continued negative figures over the next few years, with Free Cash Flow expected to turn positive by 2029 and reach $214 Million. After that, future cash flows are projected to increase significantly, surpassing $1 Billion by 2035 according to extrapolated estimates. All projections are in US dollars.
Based on this two-stage Free Cash Flow to Equity approach, the DCF analysis places an intrinsic value of $25.78 per share on Pony AI. Compared to the current market price, this valuation suggests the stock is 21.3% undervalued and may present potential upside if the long-term growth outlook remains favorable.
Result: UNDERVALUED
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Pony AI.
Our Discounted Cash Flow (DCF) analysis suggests Pony AI is undervalued by 21.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.
Approach 2: Pony AI Price vs Book
The price-to-book (PB) ratio is a widely used valuation metric, especially for companies where profits are not yet consistently positive. While earnings can be volatile in emerging sectors like autonomous driving, the book value provides investors with a tangible sense of net assets that could generate future returns as the business matures.
Normally, the "right" PB multiple for a stock takes into account a company’s growth outlook and risk profile. Higher expected growth often justifies a premium, while greater uncertainty or risk tends to lower what investors are willing to pay above book value. For Pony AI, the current PB ratio stands at 8.4x. To put that in perspective, the industry average PB is 3.8x, while the average for its closest peers is 7.7x. At first glance, this suggests Pony AI commands a premium valuation compared to both the wider software sector and its main competitors.
Instead of relying solely on broad industry or peer comparisons, Simply Wall St's proprietary "Fair Ratio" offers a more nuanced benchmark. This approach considers factors such as Pony AI’s actual growth trajectory, profit margins, underlying risks, its market cap, and sector specifics. As a result, the Fair Ratio is tailored for Pony AI’s exact situation, making it more insightful than generic averages. When directly comparing Pony AI’s current PB multiple to its Fair Ratio, the difference is less than 0.10. That suggests the market is pricing the stock almost exactly as you would expect given its fundamentals and outlook.
Result: ABOUT RIGHT
PB ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Upgrade Your Decision Making: Choose your Pony AI Narrative
Earlier, we mentioned that there is an even better way to think about valuation, so let us introduce you to Narratives. A Narrative is your unique story about Pony AI, connecting your view of the company’s future to numbers like estimated revenue, earnings, and margins. Instead of just crunching data, Narratives let you shape your own financial forecast by translating your perspective into a fair value and seeing how it lines up with the current stock price.
Narratives make investment decisions easier and more personal. They are available right now on Simply Wall St’s Community page, where millions of investors share and update their views. The real power comes from how Narratives are updated automatically whenever fresh news or earnings are released, ensuring your story always reflects the latest information.
By comparing your fair value to the market price, Narratives help you decide whether it is time to buy, hold, or sell. For example, one investor might believe Pony AI could be worth $45 per share based on aggressive growth, while another sees more risk and sets their value at $18. Both of these views are informed by their own Narrative and the data behind it.
Do you think there's more to the story for Pony AI? Create your own Narrative to let the Community know!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
