Joby Aviation (JOBY) stock price has had a rough ride as a publicly traded company. It initially surged to a record high of $17 in 2021 and then plunged to a low of $3.10 in 2023.
The stock then bounced back to $12 in May 2023 and then retreated by 56% to the current $5. Other flying car companies like Ehang, Lilium, and Archer Aviation have also slumped by double digits.
eVTOL industry is expected to grow
According to most analysts, the electric vertical take-off and landing (eVTOL) industry is about to take-off.
The real numbers about the market opportunity are relatively broad. A report by MarketsandMarkets estimates that the industry will be worth over $23 billion by 2030.
Another one by Fortune Business Insights estimates that the industry will be worth over $23.3 billion by 2028, while another sees it reaching $29 billion by 2034.
What is clear, however, is that analysts are optimistic that the industry will do well in the future. A good example is in Brazil, where San Paolo currently has over 2,000 helicopters. It is common for these people to use these planes to go to work and drop kids to school.
The other countries with substantial potential for eVTOLs are China, which has over 1,700 helipads, France, Germany, India, Japan, South Korea, Mexico, New Zealand, United Arab Emirates and Russia. These are countries with thousands of helipads.
With the urban population set to rise in the next decade, congestion will be inevitable, leading to more demand for eVTOLs.
These flying cars are more ideal than helicopters because of their flexible landing locations and are less noisy.
The challenge, however, is that these models are based on assumptions since this is a relatively new industry.
Read more: Archer Aviation vs Lilium: which is the better flying car stock?
Joby Aviation has made a lot of progress
The most recent news shows that Joby Aviation has made a lot of progress in building its battery electric plane. It is now working on a hydrogen flying vehicle that it hopes will also succeed.
The company has made progress on certification, with its plane being in the fourth stage of certification by the Federal Aviation Authority (FAA). In line with this, it has built four prototypes in testing. After this, it will move to the fifth stage, known as show & verify.
In addition to the US, the company has applied for certification in other countries like Australia and the United Arab Emirates. The goal is to ensure that it is a certified in top strategic cities ahead of the commercialisation stage.
Additionally, the company has received substantial orders, meaning that it will hit the ground running when it receives full authorisation. Most recently, it signed an MoU with Mukamalah, a company owned by Saudi Aramco, and the biggest corporate aircraft operator.
Joby Aviation also counts Delta, the biggest airline in the US, as a big investor and future client. Delta owns over 28 million shares valued at over $56 million. Intel is the other big owner with over 11 million shares.
Most notably, there are signs that Joby has a first-mover advantage since it plans to start commercialization by 2025. Archer and Lilium hope to do that in 2026.
Still burning cash
The challenge for Joby Aviation, which explains why its stock has tumbled, is that it is a cash-burning company and that it will likely raise cash again either in 2025 or in 2026.
The most recent financial results show that its net loss in the last quarter stood at over $123.3 million, a big improvement from the $286 million it lost in the same period last year. Its adjusted EBITDA was a loss of over $107 million.
For the year’s first half, Joby Aviation had an EBITDA loss of over $217 million. Looking at its balance sheet, the firm ended the quarter with over $825 million in cash, down from over $1 billion in December.
Some of this cash came from an equity raise of 44 million shares, which it issued to Baillie Gifford. At the time, these funds were worth about $180 million.
Still, most Joby Aviation investors already know that this dilution is a big risk since the company has a few years before turning a profit.
Joby Aviation risk vs reward
JOBY chart by TradingView
Turning to the weekly chart, we see that the Joby Aviation stock has retreated from last year’s high of $12 to the current $5. It has remained below the 50-week moving average while the Average True Range (ATR) has continued its downward trend.
Therefore, the stock will likely remain under pressure in the near term, with the next point to watch being at $3.20, its lowest point in December 2022. This view points to a 40% drop from the current level.
However, in the long term, the stock will likely do well when it makes progress in terms of engineering and customer wins.
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