The stock of German aerospace company Lilium NV (LILM), which manufactures air taxis, is down 58% after the company said its two main subsidiaries will file for insolvency.
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The company’s two primary subsidiaries, Lilium GmbH and Lilium eAircraft GmbH, will each be filing for insolvency soon. The reason is that Lilium could not raise the necessary funds to keep their operations afloat, and thus, will have to shut them down.
The heads of the two subsidiaries noted that they are overly indebted, and neither will be able to pay current liabilities. Lilium tried to get support directly from the German government, seeking 50 million euros of loans, but the Germans balked, and that left Lilium without many options.
A Loss of Loan Guarantees
Lilium was also trying to raise a convertible loan package of 100 million euros. But without the German government’s involvement, any hope of that was lost. There were some signs that this would not go well, noted an Aviation Week report, as the Lilium Jet has been greeted with skepticism and concern since its launch in 2019.
This comes at an odd time for Lilium. Only yesterday, the company announced a deal with General Electric (GE) to develop the electric vertical take-off and landing (eVTOL) industry. But with Lilium reeling from this insolvency, and others in the field looking to step into the arena for air taxis, it remains to be seen if Lilium can even continue in this market.
Is Lilium a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on LILM stock based on two Holds assigned in the past three months, as indicated by the graphic below. After a 57.27% loss in its share price over the past year, the average LILM price target of $0.85 per share implies 242.74% upside potential.
