Down 83% After Nvidia Hype Fades, Is WeRide a Buy Now?

Nvidia‘s (NASDAQ:NVDA) surprising reveal of a $25 million investment in Chinese autonomous vehicle leader WeRide (NASDAQ:WRD) sent the startup’s stock soaring. Having only gone public last October, WRD stock was catapulted 135% higher in a matter of days and the company was suddenly in the forefront of the industry because of the news.

Since then, however, WeRide has been a rollover collision with shares plunging 83% in the weeks that followed. WRD stock is now more than 50% below its $15.50 per share initial public offering price.

Was WeRide all hype, or is there a discount bin bargain waiting to be bought?

Receiving important support

The autonomous vehicle market looks like a rich opportunity to exploit and there is little surprise Nvidia chose to invest in it. The AI chipmaker has said it wanted to expand its presence in the automotive industry and manufacturers were increasingly incorporating its technology in their vehicles.

Nvidia’ family of embedded AI computers called Nvidia Orin, such as its DRIVE Orin system-on-a-chip (SoC) and the Jetson Orin modules, are enjoying strong demand in the industry. 

The AV market is a potential $13.6 trillion industry by 2030, and the chipmaker sees a long-term $300 billion opportunity in it. Nvidia’s automotive segment saw revenue rise 72% year-over-year to $449 million, a very small, but growing part of total revenue.

It is against that backdrop that Nvidia bought 1.7 million shares of WeRide.

Driving away with the AV lead

WeRide is emerging as the leading AV manufacturer in China with a presence in 30 cities across 10 countries, while producing and operating over 1,000 vehicles. What sets WeRide apart from the competition is its technology and partnerships. 

Its latest GXR robotaxi platform, introduced last October and rolled out this year, leans hard on artificial intelligence, but leverages over 1,900 days of robotaxi operation. The vehicles feature its next-generation of sensors and high-performance computing platform. WeRide has deployed fleets of robotaxis, robobuses, and robovans.

Despite Nvidia’s latest investment gaining notoriety for WeRide, the AI chipmaker first backed the company in 2017 when the two formed a strategic partnership. This was not an unknown quantity for Nvidia.

Big potholes block WRD’s path

WeRide’s fourth-quarter earnings report last month revealed a loss of $0.29 per share on $19.3 million in revenue. Product sales grew with stronger robotaxi, robosweeper, and robovan demand, but robobus sales and service revenues from advanced driver assistance system (ADAS) R&D fell, reflecting a mixed performance. 

Yet WeRide’s opportunities are substantial. Its partnership with Uber Technologies (NYSE:UBER) to deploy 50 robotaxis in Abu Dhabi by mid-2025, alongside Beijing permits for commercial robotaxi services, positions the AV maker in the pole position of the burgeoning autonomous mobility market. European expansions, including robobus trials in Zurich and Spain, enhance its global footprint. 

However, some high hurdles loom. It incurs significantly high R&D costs — $149.5 million in 2024 — which strains its finances, as competition from Baidu (NASDAQ:BIDU) and Pony.ai (NASDAQ:PONY) intensifies. The former is developing and deploying autonomous vehicles through its Apollo Go service, a robotaxi platform that operates in multiple Chinese cities and is expanding internationally, while the latter is close to achieving profitability after cutting the cost of its advanced driving system by 70%.

Moreover, Alphabet’s (NASDAQ:GOOG)(NASDAQ:GOOGL) Waymo has a lead in the U.S., though it faces regulatory hurdles in many cities. Tesla (NASDAQ:TSLA) may also bring its own robotaxi service to market very soon.

Key takeaway

Despite its growth potential, WRD stock isn’t a buy yet. The steep decline, ongoing losses, and competitive pressures outweigh near-term opportunities. Profitability remains a long way off with Last year’s losses were slightly worse than in 2023.  As tensions between the U.S. and China mount, they will thwart WeRide’s plan for the U.S. market. 

WeRide has real potential, but its cash burn and long slog towards making money on its business, it would be more prudent to wait. 

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