Pony.ai Lockup Expiry: Key Supply Catalyst Meets Insider Conviction

Author:

Sam Pierson,

Director of Research

May 29, 2025

On May 27th, roughly 248 million Pony.ai shares unlocked, expanding the tradeable shares by 70%. Short interest surged to 9.6M shares ahead of the event, anticipating pressure on the stock. Founders extended their lock-up through November 2026, signaling confidence. The clash between insider conviction and market liquidity sets the stage for further volatility.

  • Lock-up Expiry: Liquidity event, unlocked shares tradeable May 27th triggering volatility.

  • Short Positioning: Risking short interest anticipating pressure from unlock.

  • Against the Flow: Founders Participate in voluntary lock-up extension on 81.1M shares to November 2026, signaling long-term commitment.

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Pony.ai is a Chinese company that focuses on the development of autonomous driving technology. In November 2024 the firm issued shares to the public as an ADR trading on NASDAQ. The firm faced a liquidity event on May 27, 2025, as roughly 248 million shares began trading following the expiry of its IPO lock-up. These shares are held by early investors, employees, and insiders and represent roughly 70% of the company’s 350 million total outstanding shares. PONY shares have slipped from a February peak of $23.88 to current levels around $18, pricing in mechanical overhang and potentially skepticism about the firm’s prospects.

Short sellers expected the sharp increase in tradable shares would put downward pressure on the share price and they paid up to place short bets in advance of the event. Borrow fees for hedge funds priced in the S3 Black App have been above 100% annualized since May 15th, reaching a high above 400% on May 23rd, the last trading day before the lockup expiry. On the eve of the unlock short interest stood at 9.65M shares, a post-IPO record.

In late April the firm announced its seventh-generation robotaxi and a strategic partnership with Tencent Cloud, causing a 148% price increase between April 22 - 28th. Short interest and borrow cost streamed trended higher with the price, with shares short increasing 50% during the first three weeks of May.

On May 14th, Pony.ai co-founders Dr. Jun Peng and Dr. Tiancheng Lou announced a voluntary extension their lock-up by 540 days. Their combined 81.1 million shares, including all Class B voting stock, will remain locked until November 2026. This move represented long-term conviction and may be helping to balance investor concerns about mass insider selling. Subtracting the 21.46 million IPO shares and 81.2 million founder-held shares resolves to the 248m share unlocking float figure.

On May 27th, the first trading day following the unlock, Pony announced that it entered a Memorandum of Understanding (MoU) with Dubai's Roads and Transport Authority (RTA) to deploy its robotaxi fleet in the region, sending the share price 22% higher for the day. The price action confounded short sellers who were anticipating pressure on the share price from the unlock.

The market is now set for a test of sentiment and structure. A surge in available shares typically drives volatility, but the founders’ lock-up extension supports a narrative of insider confidence. For investors, the focus should be on how supply meets demand as trading continues post-expiry. The PONY share price closed down 13.5% on May 28th, the 2nd trading day after the unlock, with borrow costs declining precipitously and the option market pricing in a substantial reduction in borrow cost going forward. Some short squeeze risk remains with S3 Partners Squeeze Risk score currently 67.5 out of 100 as short sellers nurse mark-to-market losses waiting for the supply of shares to swamp demand.

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The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.

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