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WeRide (WRD) shares skyrocketed more than 80% on Feb. 14 after semiconductor giant Nvidia (NVDA) disclosed a significant stake in the Chinese autonomous driving technology company. This move pushed WeRide’s market capitalization above $8 billion, thrusting the relatively unknown company into the spotlight.
The surge came after Nvidia revealed in a 13F filing that it had acquired approximately 1.7 million WeRide shares worth about $25 million in the fourth quarter of 2024. The investment highlights growing interest in autonomous driving technology amid intensifying U.S.-China competition in the artificial intelligence space.
How did WeRide Perform in Q3?
In the third quarter of 2024, WeRide reported total revenue 70 million yuan, down over 5% year-over-year. While product revenue rose to $2.1 million, service revenue declined 25% to $7.9 million.
Investors and analysts remain worried about WeRide’s profit margins. In Q3, its gross profit for products stood at $500,000, while its service margins fell to 2.4%. Its net loss widened to $148.6 million in Q3. Notably, WeRide ended Q3 with $385.6 million in cash.
WeRide has been aggressively expanding its global footprint through strategic partnerships. A landmark deal with Uber (UBER) will see WeRide's robotaxis deployed in the UAE, while a memorandum of understanding with Beti positions the company to launch robo-bus services in France.
WeRide has also made significant inroads in Singapore, where it obtained key regulatory approvals for robo-sweeper operations and launched the country’s first L4 autonomous robo-bus service.
WeRide Stock Remains a High-Risk Investment
WeRide is a high-risk investment, given that its operating expenses surged 32% year over year in Q3 despite lower sales, as the company continues to invest heavily in research and development. Moreover, its reliance on Nvidia chips makes it vulnerable to potential export restrictions and regulatory changes amid ongoing U.S.-China tensions.
Despite these challenges, WeRide’s management maintains a positive outlook. During its earnings call, CFO Jennifer Li emphasized a focus on commercial expansion. “While our financial metrics show room for improvement, we’re confident in our ability to establish a broader customer base through the commercialization of our leading products and services,” Li said.
One of the two analysts who track WeRide stock recommends a “Strong Buy” and the other recommends a “Moderate Buy.” The stock’s 12-month average target price is $22, lower than its current trading price.
