The new age of urban air mobility is knocking at our doors with electric vertical takeoff and landing (eVTOL) aircraft. EVTOLs are set to transform urban transportation by promising zero emissions and reduced travel time. One of the key players navigating this change is Joby Aviation (JOBY), which is developing an all-electric air taxi with its sights set on a massive market opportunity potentially worth $1 trillion by 2040. Recently, the Federal Aviation Administration (FAA) released a new regulation for air taxi operations, making 2025 likely the year we finally see these craft commercially take flight.
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Joby has also initiated the construction of its first “vertiport” in Dubai, with plans for ongoing flights by the end of the year. Despite some of its competitors facing financial challenges, Joby is pressing ahead, seeking FAA certification for its aircraft and making considerable progress. However, potential investors should note that the company’s stock is best suited for aggressive investors with a long-term outlook due to its price volatility and the time required to scale its operations.
Commercialized Flights Taking Off This Year
Joby Aviation is developing an electric vertical take-off and landing (eVTOL) air taxi. The industry has faced significant challenges, with prominent competitors Lilium Air Mobility (LILM) and Volocopter recently filing for insolvency. Despite the withdrawal of some competitors potentially benefiting Joby’s market share, the company still faces hurdles, such as regulatory compliance and infrastructure development.
The company has started constructing its first “vertiport” in Dubai, aiming to launch initial flights in the first half of 2025 and achieve full commercialization by the latter half of the year.
Commercial flights in the U.S. may lag behind those in Dubai due to more stringent regulations. Joby plans to extend its air taxi service to major cities like New York and Los Angeles. However, these operations need FAA Type Certification to ensure the safety and airworthiness of the flying vehicles. Though the company has made strides toward FAA certification, it still requires final certification for its eVTOL aircraft. Yet, the Federal Aviation Administration’s (FAA) recently released regulation that facilitates the broader usage of air taxis is seen as a significant step toward advanced air mobility domestically.
Stockpiling a Significant Cash Reserve
The company recently announced results for Q3, reporting a net loss of $144 million, mainly due to aircraft certification and manufacturing costs. This marked a $20.6 million increase in net loss compared to Q2 2024. Adjusted EBITDA loss was $120 million, mainly from operational expenses excluding depreciation and stock-based compensation.
As of the end of the quarter, the company reported a strong financial position with $710 million in cash and investments, plus around $222 million from a secondary offering in October and a projected $500 million investment from Toyota, totaling about $1.4 billion.
Analysts Remain Constructive
The stock has been volatile (beta of 2.64), climbing over 45% in the past year. It trades near the higher end of its 52-week price range of $4.50 – $10.72 and bullishly trades above the 50-day (7.77) and 200-day (6.31) moving averages.
Analysts following the company have been mainly constructive on JOBY stock. For instance, Needham & Company’s Chris Pierce recently reiterated a Buy rating while raising the price target on the shares from $8.00 to $10.00, noting the upcoming international launch in the United Arab Emirates and anticipated domestic regulatory approval from the Federal Aviation Administration (FAA).
Joby Aviation is rated a Moderate Buy overall, based on the recent recommendations of six analysts. The average price target for JOBY stock is $8.75, representing a potential upside of 7.10% from current levels.
Joby in Review
Joby Aviation is well-positioned to propel us toward a future of electric vertical takeoff and landing (eVTOL) aircraft. Its development of an all-electric aircraft could help unlock a market worth an estimated $1 trillion by 2040. The company is charging ahead with constructing its first transport hub in Dubai and diligently pursuing FAA certification. The stock can be volatile, and the scaling of operations will take time, so potential investors should have a high-risk tolerance with a long-term view.
