Joby Aviation (NYSE:JOBY) electric vertical take-off and landing and other eVTOL stocks are only development-stage companies. A Joby Aviation stock analysis would indicate it’s not a stock for most investors.
They have no service to offer, no product to sell and no revenue to speak of. They’re operating on future potential. That’s not much to go on. Retirees, don’t go putting JOBY stock in your portfolio! Yet those with a stomach for high risk might want to nibble on what could be a winning bet.
A Joby Aviation Stock Analysis
Fast, clean, and affordable short-haul air travel is the stuff of dreams. Anyone who’s sat in grinding rush-hour traffic wishing they could fly overhead to get to their destination will appreciate the promise of robotaxis. But we’re not there yet.
Joby Aviation’s prototype aircraft can fly up to 150 miles on a single charge, carry four passengers and a pilot, and operate quietly and safely in urban and suburban areas. It’s also established strategic partnerships with Toyota, Delta Air Lines, and Uber Technologies to support its vision of creating a global ride-sharing network in the sky.
The robotaxi company also delivered an aircraft to the U.S. Air Force for testing as part of a $131 million Defense Dept. contract to explore logistics missions for carrying cargo and personnel transport on base. NASA is also taking part to see where eVTOL can fit into the national airspace scheme.
Yet Joby’s not the only one wanting to fly the friendly skies. The eVTOL market is surprisingly thick with competition. Lilium, Volocopter, Archer Aviation, Moog, and Boeing are just some of the estimated 200 companies vying for market relevance. As the Boeing entry shows, some of these are bigger and better-financed businesses than Joby.
For an industry in its infancy, though, there is room for all. Market researchers at Frost & Sullivan forecast by 2040 some 2.5 million one-, two-, and four-seater eVTOLs will be needed. While we know analysts like to estimate almost limitless exponential growth, it does suggest there is a large and growing market for the robotaxis.
Market Turbulence Still an Issue
Our Joby Aviation stock analysis reveals the company aims to tap into this market by offering a convenient, cost-effective, and eco-friendly alternative to ground transportation. It claims its eVTOL aircraft can reduce travel time by up to 80%, lower carbon emissions by 90%, and offer fares comparable to Uber.
As promising as it is, Joby Aviation and the other eVTOL players still need to navigate the regulatory labyrinth. While the Federal Aviation Administration has been accommodating to the industry so far, there is a lot of runway left before liftoff.
Joby is traversing a five-step plan. It completed step one and is almost through step two. It also says the FAA accepted 84% of its step three plans. But that’s a lot different from saying it is more than three-quarters of the way through phase three.
The real challenge is step four, where it undergoes testing and analysis. That could be the make-or-break point.
Plenty of companies in other industries have come so far only to stumble and fail in the end. There is no sign Joby is one of them, but that’s why JOBY stock is only for risk-tolerant investors. There will be many successes and failures before Joby crosses the finish line if it ever does.
Risky But Worth It?
As I’ve noted previously, this is the crucial phase for Joby Aviation. Its costs and expenses will accelerate but it has little to no revenue. It will need either greater cash infusions from its backers or it will need to access the debt and equity markets. Joby issued 44 million new shares last year for $180 million.
However, the eVTOL company has sufficient liquidity for the time being. It ended the third quarter with $1.1 billion in cash, equivalents, and short-term investments. Joby also has no long-term debt. It burned through $337 million of cash over the past 12 months suggesting it can survive several years at its current pace. But as we said, that pace will quicken.
Joby Aviation is a stock to watch. It will be interesting to see whether commuters actually take to the skies in eVTOLs but it will be years before a robotaxi ride costs the same as an Uber.
That’s why caution is warranted here. If you do buy JOBY stock, only do so in small amounts and only for the portion of your portfolio reserved for your riskiest investments.
On the date of publication, Rich Duprey did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.