Shares of Pony.ai (NASDAQ: PONY) are flying higher on Monday. The company's stock rose 40.2% as of 12:16 p.m. ET today. The move comes as the S&P 500 lost 0.8% and the Nasdaq Composite lost 1.3%.

A key big-tech partnership

The company, which develops self-driving technologies, announced a new partnership with Tencent Holdings, a large Chinese tech company headquartered in Shenzhen. Pony.ai will integrate its autonomous robotaxi services into Tencent's Weixin Mobility Services platform and Tencent Maps.

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A boost for the company's profile

The deal validates the company's technology, demonstrating its usefulness to a company as powerful as Tencent. The collaboration will likely help Pony.ai gain more clients and drive revenue growth. It also benefits from exposure to Tencent's tech ecosystem, whose advanced cloud computing, big data, and artificial intelligence muscle will enhance Pony.ai's platform and help refine its models.

The business is currently bleeding cash and has fairly meager revenue. Last quarter, it lost roughly $180 million on $35 million in sales.

These numbers look concerning, but they're not unusual for a relatively young company still proving its technology. It is well funded and has a strong balance sheet with nearly $750 million in cash on hand.

The new partnership will undoubtedly help it move toward profitability. For those with patience and a higher risk tolerance, I think Pony.ai could pay off.

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Pony AI (NASDAQ: PONY) stock just keeps on galloping. For the third day in a row, the small-cap Chinese robotaxi and robotruck company rode higher on Friday, building on huge gains Wednesday and Thursday. The stock tacked on another 22.7% through 9:40 a.m. this morning and now is up more than 120% over the past three days.

Yes, you read that right: Pony doubled, and then went up even more.

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Image source: Getty Images.

Pony express delivers good news

So far this week, the biggest little Chinese small cap you've never heard of (before this week) has announced it's producing three new robotaxi models in cooperation with Beijing Automotive Group, Guangzhou Automobile Group, and Toyota Motor (NYSE: TM), respectively, and that it has lined up local partner Hesai Group (NASDAQ: HSAI) to supply it with AT128 lidar sensors for its robotaxis.

Today, Pony added that it's partnering with another local company, Tencent Holdings (OTC: TCEHY), to further "advance autonomous driving technology and robotaxi commercial deployment."

This tie-up will pair Pony's "cutting-edge" autonomous driving system with tech products from Tencent, specifically the latter's Weixin (or "WeChat") social media, messaging, and payment app, Tencent Maps, and its "robust cloud computing, big data and AI infrastructure," all of which sound to me like logical add-ons to an electric-car-slash-robotaxi service.

Is Pony AI stock a buy?

Tencent might do well to ante up a bit of cash. Tencent's tech contributions are all great, but there's no mention of financial support in the press release, and Pony is still burning cash, and losing $274 million a year.

While the company has considerable cash reserves, a little more could go a long way to ensuring Pony stock doesn't go bankrupt before 2029, the first year it's expected to be profitable, according to analysts polled by S&P Global Market Intelligence. Meanwhile, until the financial picture firms up, I must still consider Pony a speculative, momentum-driven stock.

Should you invest $1,000 in Pony Ai right now?

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The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Pony Ai wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $591,533!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $652,319!*

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tencent. The Motley Fool has a disclosure policy.