Joby Aviation: Bull vs. Bear
Key Points
Joby Aviation performed test flights of its electric vertical take-off and landing aircraft across Texas in September.
It's working through FAA type certification and aims to begin commercial operations in the coming years.
The challenge is that Joby is burning significant cash as it works through certification and scales its business.
In September, Joby Aviation's (NYSE: JOBY) flying air taxis took flight in Texas as part of the Federal Aviation Administration's Electric Infrastructure and Operations Pilot Program (eIPP), demonstrating routes over major regional infrastructure.
Joby's electric vertical take-off and landing (eVTOL) aircraft promises to change the way we travel and is inching closer to becoming widely available to the public. But is Joby Aviation stock worth investing in right now? Let's dive into the stock -- and its bull and bear cases -- to find out.
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The bull case for Joby Aviation
eVTOL aircraft have become possible thanks to advances in batteries, electric motors, and other flight-enabling technologies. According to estimates from Morgan Stanley, the urban air mobility market could become a trillion-dollar industry by 2040 and be worth $9 trillion by 2050.
Joby Aviation is one of the top companies developing eVTOL aircraft and is racing toward commercial operation as it progresses through the fifth and final stage of FAA type certification. This certification determines whether its eVTOL is airworthy and is a crucial milestone for Joby to scale up and begin commercial services.
Joby is also part of the White House-backed eVTOL Integration Pilot Program (eIPP), which spans 11 states. Through eIPP oversight, operations will transition from pilot-only flights to non-paying passengers and eventually paying passengers. On Sept. 10, Joby kicked off a week of demonstration flights across the Dallas-Fort Worth region, including direct flights to major urban hubs and Dallas-Fort Worth International Airport.
After acquiring Blade Urban Air Mobility, Joby is beginning to generate revenue. Blade provides chartered helicopter and jet flights to customers. Joby spent $125 million to acquire the company, gaining an established customer base and a decade of air-charter experience across key markets. Blade generated $36.2 million in revenue in the second quarter.
The bear case for Joby Aviation
Joby has made significant progress, but must still work through the final stages of FAA type certification. Once Joby proves the airworthiness of its aircraft, it must prove it can manufacture and operate them at scale. Joby's in-house manufacturing requires more capital and labor than rival Archer Aviation's contract manufacturing approach. Joby has 12 aircraft in production but expects to deliver two in 2026.
Joby is burning substantial capital. During the second quarter, the eVTOL developer reported a net loss of $245 million, and it projects cash burn of $385 million to $415 million in the second half of this year. Since its founding, Joby has accumulated a deficit of $3.1 billion.
JOBY Revenue (TTM) data by YCharts
Even after its eVTOL aircraft are approved, commercial adoption rates remain uncertain. While eVTOLs can reduce travel times, consumer concerns could delay widespread public adoption.
Is Joby Aviation stock right for you?
Joby Aviation is an early-stage company developing a new method of transportation. Last year, the stock reached nearly $20 per share, and today it is down 70% from that high. Right now, Joby is a high-risk, narrative-driven stock, as investors look for it to achieve FAA certification and begin performing more passenger flights.
If you believe in the future of flying taxis and Joby Aviation's role in it, and don't mind the extreme price swings, Joby stock could be for you. But if you do decide to buy, expect significant volatility and make sure your investment is part of a broadly diversified portfolio.
Courtney Carlsen has positions in Joby Aviation and Morgan Stanley. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.