Electric Vertical Take-Off and Landing (eVTOL) stocks have done well in the last 12 months as investors anticipate their certification and cheer their fundraising from top blue-chip companies. Archer Aviation stock price has soared by 100%, while Joby Aviation is up by about 20%. So, which is a better investment between the two companies?
Why Archer Aviation and Joby stocks have soared
Archer Aviation and Joby Aviation are the two biggest companies the eVTOL industry with a market cap of $5.8 billion and $6 billion.
These firms are building aircraft that will mostly be used in urban centers and by the Department of Defense.
Archer Aviation is building the Midnight plane that will offer air taxi services in major cities. It can sit up to four passengers and have a range of about 100 miles. Its top speed will be about 150 miles a hour.
Joby Aviation is building the S4 plane with a range of about 150 miles and a speed of 200 mph.
ACHR and JOBY stock prices have surged in the past few months after they made substantial progress on their development and certifications. Joby Aviation has already received numerous certifications, including the Repair Station Certificate and have done the first three stages of the FAA certification.
Archer Aviation has also received some certificates. The two companies hope to receive full certification later this year and then start commercialization immediately. Analysts believe that these firms are in the pole position for an industry that is expected to see strong demand.
Read more: Joby Aviation stock price has soared: is it too late to buy?
Studies estimated that the eVTOL aircraft market size was valued at $1.2 billion in 2023, a figure that will get to $23.4 billion in 2030. Other studies have estimated that the eVTOL industry will be bigger than that, with one of them predicting that it will get to $170 billion by 2034.
Therefore, if these estimates are correct, it means that Joby and Archer will be the most dominant players in the industry. Historically, early movers usually do better than those who are playing catch up.
However, the risk is that the industry may not do all that well as analysts estimate since their predictions are based on assumptions.
JOBY and ACHR balance sheets
The JOBY and ACHR stocks have soared because of improvements in their balance sheets. As pre-revenue companies, the biggest concern among investors is that of dilution, which happens when a company raises cash by selling shares.
The two companies have been highly dilutive. Archer Aviation’s outstanding shares jumped from 50 million in 2020 to 383 million today. Similarly, Joby’s outstanding shares have soared from 69 million in 2021 to 717 million today.
Archer Aviation worked to handle its balance sheet last year as it raised cash from Stellantis, the parent company of Jeep and Chrysler. As part of the deal, Stellantis pledged to fund Archer’s manufacturing in exchange for quarterly share distributions.
Joby Aviation also received funding from Toyota, a company known for its expertise in manufacturing.
JOBY vs Archer Aviation: Better eVTOL stock to buy?
At this point, it is relatively difficult to give a better estimate on the better buy between the two companies. In a statement to Invezz, a Barclays analyst said:
“Archer Aviation and Joby Aviation are market leaders in an industry with an unknown potential. They have invested robustly and are hoping to dominate the eVTOL industry. If they are successful, the two companies may become big players just as Tesla did in the EV industry. The key phrase here is if. There’s also a chance that the industry will not do well as analysts anticipate.”
The analyst recommends that investors buy a small piece of the two companies since it is hard to separate them now. These investors will benefit if the two firms become the next Tesla. They will not lose much if they fail.
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