FAST NEWS: EHang wins $23 million in new investment

The Latest: Autonomous aerial vehicle (AAV) maker EHang Holdings Ltd. (EH.US) said on Tuesday that a group led by South Korean music producer Lee Soo Man has agreed to invest $23 million in the company through a private placement.

Looking Up: Lee is best known as founder of SM Entertainment (041510.KS), a South Korean entertainment company worth more than $2 billion.

Take Note: EHang is rapidly burning through its cash, which totaled 218 million yuan ($30 million) at the end of March, as it rushes to commercialize its self-piloted aerial vehicles.

Digging Deeper: EHang is one of several global companies developing small, self-piloted aerial vehicles, mostly used for tourism and delivering goods. The company’s revenue quadrupled year-on-year to 22.2 million yuan in the first quarter, based on its delivery of 11 vehicles during the period. Still, the company posted an 87 million yuan net loss for the period, as its expenses far outpaced its revenue. EHang is unlikely to earn any profits until its vehicles are officially certified by one or more of the countries where it operates. It indicated in its last quarterly report that it is close to completing all necessary steps for certification of its vehicles in China, and that it expects to finish them “as soon as possible in the near term.”  

Market Reaction: EHang shares rose 20% in Wednesday trade in New York. The stock now trades near the top of its 52-week range.

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Reporting by Doug Young