What’s Driving Surf Air Mobility Stock’s 2x Surge?

Surf Air Mobility stock (NYSE:SRFM) has almost doubled over the last five trading days, rising to about $7.60 per share. So what’s driving the surge? The gains come after AI and big data software major Palantir increased its stake in Surf Air to almost 20%, up from 10% a year ago, combining equity-for-services and direct purchases. This apparently added to investor confidence in the small cap stock which has a market cap of about $300 million, currently. Surf Air derives a bulk of its revenue from its scheduled commercial air service, on-demand charter flights, and air cargo services, focused on regional routes. However, the upside from the stock could come from the company’s plans to electrify short-haul regional air travel by using hybrid and fully electric propulsion systems. Unlike most of its peers, the company plans to retrofit existing aircraft such as those made by Cessna with its powertrain technology, enabling faster and more cost-effective deployment. The company is looking to commercialize its green aviation technologies at scale by 2027. (related Palantir Stock’s Growth Is Real, But So Are Valuation Concerns)

Is The Stock A Buy Or Sell Following The Rally?

Based on valuation metrics, like price-to-sales or price-to-profits, SRFM stock still appears fair compared to the broader market. Surf Air Mobility trades at a P/S ratio of about 2.7x, versus 3.1 for the S&P 500. Revenue has grown – rising 31.2% over the last 12 months, from $86 million to $112 million. However, profitability remains a key concern. The company reported Operating Income of -$44 million, translating to a weak Operating Margin of -39.5%. Operating Cash Flow was even worse at -$57 million, implying an OCF margin of -51.0%, compared to 14.9% for the S&P 500.

The company’s balance sheet is also not particularly strong. Surf Air Mobility has $91 million in debt, against a market capitalization of $300 million as of July 11, 2025 – resulting in a Debt-to-Equity Ratio of about 30%, which is above the S&P 500 average of 19.4%. Cash and cash equivalents stand at $6.6 million, out of total assets of $105 million, giving a modest Cash-to-Assets Ratio of 6.3%, although this number may have improved in Q2, as the company completed a $27 million direct equity offering at $2.50 per share, allowing for strategic expansion and debt reduction. Downturn resilience has also been poor for the stock, with the stock faring worse than the broader market during recent drawdowns.

Now, investing in a single stock like Surf Air can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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