Why EHang Holdings Stock Sank Today, and Then Got Better

What happened

Flying electric vehicle-maker EHang Holdings (NASDAQ: EH) is doing loop-de-loops Wednesday.

Initially, EHang stock seemed prepared to give back some of its recent gains, falling 13% in early trading. As of 11 a.m. EST, however, the stock seems to have found its updraft -- and is up 9%. Investors want to know: When today is done, will EHang be facing up or down?

So what

Two weekends back, EHang conducted a successful demonstration of its autonomous aerial vehicles, flying passengers around and island in island in Guangdong Province, China. Local government officials stood in attendance, cheering the company along -- and they aren't the only ones who have been cheering.

Since news of the demonstration was announced, EHang shares have gone totally vertical, more than doubling in price through yesterday's close (including a better than 50% gain yesterday).

EHang EH216 AAVs in flight.

EHang has air taxis. But does it have profits? Image source: EHang Holdings.

Now what

Is there a reason for today's optimism -- something that could keep the momentum moving higher?

Not that I can see. In fact, there's no news about EHang on the wires today, and not a peep out of Wall Street either. That being said, EHang does seem to be forging a brand new industry here -- "robotic air taxis" -- and until a real competitor arises to challenge it, the company would seem to have this industry to itself. I can certainly see how investors would find that prospect exciting.

Now, let's see if the company can figure out a way to earn a profit from this new industry it's creating -- because so far, EHang has not done that.

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

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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