Pony AI Inc ( PONY ) has emerged largely unscathed from a bear fight.

What To Know: Short Seller Grizzly Research issued a bearish report on Chinese autonomous vehicle company Pony.ai on Friday, raising concerns about the company’s technology.

Following a series of on-the-ground tests of the company’s self-driving vehicles, Grizzly alleged that Pony has “very little to offer” and is more of a “smoke and mirrors show.”

“Allegedly, PONY not only falsified data for its AV software, but management was also aware of the issues and was actively covering them up,” the short seller wrote in a research report.

Benzinga has reached out to Pony.ai for comment on the report.

The firm highlighted comments from an apparent company employee suggesting that the company has used deceptive advertising to ride the autonomous vehicle hype.

Grizzly said it determined from its own testing that Pony has fewer pick-up spots, longer waiting times and a worse customer experience than competitors in the space. The short seller said it confirmed the issues through expert interviews.

Grizzly also raised concerns about the company’s financial standing and expressed concerns related to the company’s alleged dependency on the Chinese government. While capital needs are intensifying, the company’s financials are worsening, the short seller said.

Pony made its public debut on the Nasdaq last year, raising $260 million in its IPO. Ahead of its IPO the company showed encouraging trends for revenue and profitability, but Grizzly said revenue growth has slowed and net losses are accelerating.

Grizzly is also concerned about Pony’s valuation. The company had a market cap of approximately $4.54 billion as of Friday's close, according to Benzinga Pro.

The short seller believes the company’s valuation has benefited from “hype” in the robotaxi space. There is also excitement surrounding a potential deal with former Uber CEO Travis Kalanick that was reported in June. Grizzly believes a potential acquisition of the company’s U.S. operations is unlikely due to a lack of meaningful operations and the company’s aforementioned worsening financial standing.

“We think that PONY finds itself fundamentally in a difficult position with worsening financials, growing cash needs, and fierce competition that seems way ahead. PONY's close ties to the Chinese government make any kind of acquisition very difficult from the investor's perspective,” the short seller said.

Pony announced last week that its seventh-generation robotaxi recently entered mass production for multiple models and began road testing. The company is targeting an expansion of its fleet to 1,000 vehicles by the end of 2025.

PONY Price Action: Pony.ai shares are up approximately 135% over the past three months. The stock is trading essentially flat since the short report was published at the end of last week. Pony shares were trading higher early in Monday’s session, but were down 0.55% at $12.70 at the time of publication, according to Benzinga Pro.

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