1 Billion Reasons to Buy This Under-the-Radar Stock
Urban air mobility was once the stuff of sci-fi movies but in 2009 Joby was built to bring the future to the present. It has built an EV takeoff and landing aircraft that has won votes of confidence from the likes of manufacturing giant Toyota.
The big idea behind the firm is to reduce traffic congestion by making sustainable air transportation affordable and safe. And with a war chest of almost $1 billion in cash and equivalents, it will be a brave investor who bets against the aviation pioneer.
So, is Joby a buy now?
Key Points
- Joby developed an aircraft to reduce urban congestion, and is backed by Toyota.
- With over $1 billion in cash and a projected $1.5 trillion urban air mobility market by 2040, Joby is a promising play.
- Joby achieved crucial FAA certifications and aims to begin commercial operations this year, targeting 300-400 aircraft production by 2026.
Joby Has Enormous Potential
Betting on Joby now is no doubt a risky proposition. While it has nearly a billion dollars sitting on its balance sheet, but it also lacks revenues. However that could change given that the global urban air mobility market is projected to reach $1.5 trillion by 2040, according to Morgan Stanley.
The bull thesis for Joby bets on cities becoming more congested and the demand for efficient transportation increasing. Joby’s aircraft are designed for short-haul flights within urban areas.
The aircraft are fully electric, capable of vertical takeoff and landing, and designed to be quieter and more efficient than traditional helicopters. With a range of 150 miles on a single charge and speeds up to 200 mph, Joby’s aircraft are designed to reduce travel times in crowded urban areas.
Notably, the company has achieved several key milestones, including the first-ever eVTOL aircraft certification basis with the FAA in 2020 and the first-ever eVTOL aircraft airworthiness approval in 2022.
It has also landed a full $400 million from Toyota and the company won broader distribution when it acquired Uber’s urban air mobility initiative, Uber Elevate, in 2020.
Together, these partnerships not only provide deep financial pockets but also enhance Joby’s capabilities in production, logistics, and customer acquisition.
Is Joby A Buy?
Joby went public via a SPAC merger with Reinvent Technology Partners in August 2021, raising $1.6 billion in gross proceeds. As of the latest earnings report, Joby has a strong balance sheet with over $1 billion in cash and no debt.
Though losing nearly $150 million quarterly, analysts expect sales growth this year. They project commercial operations to begin in earnest this year, with significant revenue growth expected as urban air mobility services becomes more widely adopted.
The bull thesis on Joby can be summarized as:
- Early mover in a mobility market forecast to grow at a CAGR of 30% from 2023 to 2040
- Manufacturing support and a wealth of capital from Toyota
- Aims to produce 300-400 aircraft annually by 2026.
- The first eVTOL company to receive a G-1 certification basis from the FAA, a crucial step towards commercial certification.
It’s not a slam dunk, though, given how early it is and the potential hiccups that could come from regulatory approvals and technological challenges, as well as broad consumer adoption. Still, Joby is an intriguing play on the future of urban air mobility.
