Pony AI Inc (PONY) experienced a sharp 5.80% pre-market plunge on Wednesday, continuing the downward trend that began in after-hours trading on Tuesday. This decline comes on the heels of a dramatic trading session that saw the stock soar by 42% intraday before reversing course.

The volatility in Pony AI's stock price is primarily attributed to the announcement of a strategic partnership with Uber Technologies (UBER) to deploy Pony AI's robotaxis on the Uber platform. Initially, this news drove significant investor enthusiasm, with trading volume surging to more than 44 million shares compared to the daily average of about 5.53 million. The partnership, set to launch first in a key Middle Eastern market later this year, was initially viewed as a potential game-changer for Pony AI's autonomous mobility technology.

However, the sharp reversal in after-hours trading on Tuesday, which saw a 5.03% drop, and the continued decline in pre-market trading on Wednesday suggest a classic "sell the news" scenario. Investors who benefited from the substantial intraday gains appear to be locking in their profits, leading to the current downward pressure on the stock. This pattern underscores the speculative nature of the autonomous vehicle sector and highlights the market's sometimes counterintuitive reactions to seemingly positive developments. As Pony AI moves forward with its Uber partnership, investors will be closely watching to see how this collaboration translates into long-term value for the company.