What’s Happening With JOBY Stock?

Joby Aviation (NYSE: JOBY) is experiencing significant momentum in the electric vertical take-off and landing (eVTOL) sector, evidenced by a 65% surge in its stock over the past year. This growth is driven by increasing demand for its air taxi services and strategic progress in its commercialization efforts.

This optimism has been further fueled by a recent executive order from President Trump. The order aims to strengthen U.S. defenses against threatening drones and to accelerate the development of electric air taxis and supersonic commercial aircraft, directly benefiting companies like Joby and Archer Aviation. Separately, if you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception. Also, check out – HIMS Stock To $25?

Joby is setting the stage for its air taxi service in the United States, with Los Angeles and New York City slated as initial launch markets. These plans are moving forward thanks to partnerships with Delta Air Lines and Uber. Service is expected to begin shortly after Joby receives type certification from the Federal Aviation Administration (FAA).

Joby has reached a significant certification milestone by completing its first FAA-conforming major sub-assembly, specifically the aircraft tail. This achievement marks a crucial step in their certification process.

Beyond the U.S., Joby is also expanding its global reach. The company recently announced a partnership with Virgin Atlantic to bring its service to the United Kingdom. Additionally, Joby has teamed up with ANA Holdings Inc., Japan’s largest airline, to introduce its service in Japan.

The company’s international expansion is bolstered by its agreement with Dubai’s Road and Transport Authority (RTA) to launch air taxi services in the Emirate by 2026. Joby’s planned service was announced as part of a definitive agreement signed by Joby, the RTA, and Skyports in February 2024, which included exclusive access for Joby to the Dubai air taxi market for six years. The partnership with Skyports enables the development of vertiport networks, positioning the UAE as a key early market and proving ground for its global expansion strategy.

Joby’s strategic partnerships are providing significant financial support and manufacturing expertise. Toyota Motor Corporation has invested, bringing the total investment in Joby to nearly $900 million. Joby is also rapidly scaling its manufacturing capabilities. It plans to invest up to $500 million in its first scaled aircraft production facility in Dayton, Ohio, complementing its existing manufacturing facility in Marina, California, further positioning the company for its targeted 2025 commercial operations.

The eVTOL market is poised to revolutionize urban mobility by introducing aircraft that are significantly quieter than traditional helicopters. This noise reduction capability enables urban operations in areas previously restricted due to sound pollution, thereby greatly expanding the potential market for air travel. Joby’s strategic partnerships, such as the one with Delta Air Lines, are crucial for mitigating operational risks and accelerating its market entry. Beyond air taxi, eVTOL has vast use case in the defense sector.

A recent and significant development—a five-country alliance (U.S., UK, Australia, Canada, and New Zealand) aimed at streamlining global eVTOL certification—could significantly accelerate Joby’s international deployment once it secures its final U.S. FAA type certification.

Despite many positive indicators, Joby’s stock remains below its all-time high of over $15, recorded in 2021. Several inherent risks contribute to this disparity. Regulatory hurdles, particularly certification delays, pose a significant threat to future revenue. Execution risks, tied to manufacturing and operational complexities, also present considerable challenges. Furthermore, competition from rivals like Archer Aviation, which boasts a $6 billion order book, could impact Joby’s market share. See – What’s Happening With ACHR Stock?

Like many early stage companies in this capital-intensive industry, Joby also faces ongoing funding requirements for its scaling efforts. The stock has historically shown higher volatility and vulnerability during recent broader market downturns. For instance, it lost approximately 80% of its value during the 2022 inflation shock, significantly underperforming the S&P 500 index’s peak-to-trough decline of 25%, which underscores its speculative nature.

Overall, Joby Aviation appears poised for significant growth, yet this potential is accompanied by considerable risks. Now, we apply risk assessment framework while constructing the Trefis High Quality (HQ) Portfolio which, 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.