Joby Aviation Inc. (JOBY)
Is $JOBY the eVTOL Air Apparent?
Joby Aviation, Inc. (JOBY) is a PRE-REVENUE / MID CAP company founded in 2009 and began public trading on the NYSE in August 2021. In their own words from Joby’s investor’s relations page:
“Joby Aviation, Inc. (NYSE: JOBY) is a California-headquartered transportation company developing an all-electric vertical take-off and landing aircraft which it intends to operate as part of a fast, quiet, and convenient air taxi service beginning in 2024.” [https://ir.jobyaviation.com/about-us/faq]
Phil’s Take:
The eVTOL (Electric Vertical Take-Off and Landing) is usually something Clint won’t stop talking about at lunch but this week I decided to (read as he is actually making me) take a break from my favorite biomed stocks and spotlight my favorite company in the space, Joby Aviation (JOBY).
When we spotlighted Archer Aviation (ACHR) I talked about how important I view recognizable names when buying into the technology. When it comes to aviation I don’t know if there is a bigger name than the US Air Force. In September JOBY delivered their first aircraft to the Air Force as part of a $131 million dollar contract. NASA also plans to utilize JOBY aircraft as part of a research on air taxis and will be part of the tests and demonstrations the Air Force is conducting. They have also signed an agreement with SK Telecom to jointly undertake flight testing in South Korea as part of that country’s efforts to develop an urban air mobility sector. This followed SK Telecom’s $100 million equity investment in July. Amongst other notable names are a multi-year multi-city partnership with Delta to explore an airport taxi service. Joby has partnered with a Toyota subsidiary to explore similar taxi potential in Japan. The relationship with Toyota has continued to expand including production assistance and the CEO of Toyota Motor North America Tetsuo Ogawa joining JOBY’s board.
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With new technologies like eVTOL I also want to see continued progress with the FAA certification process. In November Joby announced that the FAA had accepted 84% of their Certification Plans up from 68% in the previous quarter. This has allowed them to shift their focus and resources to Stage 4 (out of 5 stages) Testing and Analysis. They have expanded their flight test program to now include four test pilots.
Joby has also announced the creation of their first scaled manufacturing facility in Dayton, Ohio. Their pilot production facility in California currently has 3 aircraft in production compared to the 500 aircraft per year capacity that the Dayton plant will eventually have. Joby plans on that facility coming online in 2025 with Toyota continuing to advise on the transition to scaled production.
The numbers continue to be a little wonky as the company utilizes the revaluation of derivative liabilities to tweak income (hence the loss in Q2 and the net income in Q3). What is encouraging is the $1.1 billion cash/short-term investments they have available to them.
Clint’s Take:
I continue to love the eVTOL investment space. Unlike Tesla’s (TSLA) hold on EVs here, we have yet to see a clear leader in the pack, making this market seem wide open. Tracking eVTOLs now, knowing the companies, and watching them progress from certification to commercialization might be the “ground floor” investment speculative traders dream of. But I digress.
JOBY numbers and model look very similar to ACHR, which we profiled back in December 2023. They both have government contracts, larger car manufacturers, and airline partnerships. Even their stock price seems to move in lockstep, with the edge going to JOBY, which is usually $1.50-$2 more, but the moving averages (5, 20, and 50 days) typically keep the same trajectory. JOBY and ACHR’s stock prices respond positively to eVTOL news, even if it isn’t specifically about them. Many institutional investors seem to be hedging their positions by owning both (Blackrock and Vanguard, for example).
Phil and I disagree on the eVTOL landscape. He is concerned about whether it can support more than one or two names. Once you broaden out air taxis, ride share (very long view prospect), tourism (city tours, landmarks), and all the other possibilities, there will be room for plenty, but not everyone. This is definitely not a two-horse race. Competition is easy to find in a budding pre-revenue market like eVTOL. Blade (BLDE), Lillium (LILM), and even Hyundai (HYMTF), who really kicked off things for eVTOL back in 2020, are just a few publicly traded companies in the field. Things becomes much more crowded once you start looking at privately owned companies with deep pockets (i.e., Horizon Aircraft, Jaunt Air Mobility…).
That said, JOBY is still a front-runner here. It has a path to profitability that makes its current price a value, but I am willing to wait through this current market pullback to get an even better price nearer to the $5-$5.15 range.
Moving Forward:
We are putting JOBY in the “Checking My Match” watchlist. Pushing aside for a moment the recent volatility of the market, JOBY remains well positioned to continue their path towards FAA certification and commercial marketability. Their partnerships plus cash on hand provide a solid footing for the long term. My only questions remain about the size of the eVTOL market and how many competitive companies it can support. Clint makes a great point about how many other companies in the space and future rivals aren’t even public. If JOBY can maintain their first mover advantage this has the makings of a strong long hold. If the recent downward trend of the market continues to hammer stock price for a little while longer, I really like JOBY’s upside potential.
Related: To help broaden out the sector check out our take at fellow eVTOL maker Archer Aviation (ACHR).
What’s New: 02/22/24
JOBY announced their Q4 earnings report on 2/21/2024. The per share loss of $-.17 barely beat the expectation of $-.18. It is usually a good sign when pre-revenue companies beat earnings expectations, it means they spent their money more wisely than the market expected. The big news from the report was their reiteration of the progress they have made towards FAA certification. JOBY announced on 2/21 that they were the first eVITOL company to complete Phase 3 of FAA testing. JOBY estimates they are somewhere between 10%-20% through the fourth of the FAA’s five stages putting them on pace to meet their 2025 goal.
Our original post spotlighted their partnership with Dubai and JOBY highlighted an agreement that gives JOBY the exclusive right to operate air taxis in Dubai for six years. The agreement also included potential financial support and a potential regulatory structure that could allow JOBY to operate in Dubai ahead of FAA type certification. Good news from Dubai also included an agreement with Skyports Infrastructure to “fund, develop and operate four initial vertiport sites across Dubai, featuring Joby’s Global Electric Aviation Charging System (“GEACS”).
While I remain cautious about the size of the long term eVITOL market, this is significant progress. Crossing the FAA finish line first could give JOBY a significant economic advantage. The strength of the relationship with Dubai makes it more likely that JOBY will make that goal. Having access to $1 billion cash and short-term equivalents doesn’t hurt either.
You can keep track of Joby Aviation and all the companies we have covered in Spotlight by checking out the Ledger Island Watchlists.
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