Shares of EHang Holdings (NASDAQ:EH), a maker of flying electric vehicles (aka "air taxis"), are taking off on Monday, the first trading day after EHang released some optimistic news. As of 11:05 a.m. EST, EHang stock is up 13.9%.
Why? As the closing bell struck on trading Friday, EHang announced that "leading European asset management firm" Carmignac has invested $40 million in the company through a private placement of shares.
On the one hand, EHang says it "intends to use the proceeds to further strengthen the technology advancement and ... to reinforce its leading position in the global urban air mobility (UAM) industry."
With EHang currently unprofitable, the money will surely come in handy. But with a balance sheet brimming with $38 million in cash and only a couple million dollars worth of debt, it's not as if EHang was strapped for cash to begin with.
To me, the more important side of this story is that it's showing growing institutional investor interest in EHang in the Western world. That's a strong demonstration of faith in the company's technology, and its prospects for growth.
The investor interest could also come in handy in the future, should EHang decide to parlay some more of its now $4.1 billion market capitalization -- up five times in the past year -- into some real money, by doing a much larger share issuance down the road.