Imagine zipping across a crowded cityscape, bypassing gridlocked streets as you soar toward your destination in a quiet, electric flying taxi. This isn't science fiction -- it's the future Joby Aviation (JOBY 3.71%) is working to create.
The company stands at the forefront of the electric vertical takeoff and landing (eVTOL) aircraft race, pushing the boundaries of urban air mobility. As such, let's take a deep dive into the company's business model, stock performance, and near-term outlook to see if it deserves a spot in your portfolio.
Image source: Getty Images.
A look at Joby Aviation's unique business model
Joby's business model sets it apart from traditional aerospace companies. Instead of selling aircraft to airlines or individual consumers, Joby plans to manufacture, own, and operate its eVTOL aircraft.
This vertically integrated approach aims to provide aerial ride-sharing services directly to consumers through a convenient app, similar to ground-based, ride-hailing services. The company also intends to offer transportation services to government agencies, including the U.S. Air Force.
This unique model gives Joby end-to-end control over the customer experience, allowing it to optimize for safety, comfort, and value. However, it also means the company must shoulder the significant costs of aircraft production, infrastructure development, and service operations.
A market leader: Soaring above the competition
When it comes to eVTOL stocks, Joby Aviation isn't just another player in the game -- it's leading the pack in some important ways:
- Market capitalization: At $4.68 billion, Joby is valued at nearly three times Archer Aviation, its closest peer in terms of market cap.
- Cash runway: With an estimated 2.7 years of cash runway (author's own estimate), Joby has the second-longest financial cushion in the space, trailing only Blade Air Mobility.
- Shareholder dilution: Joby has increased its share count by only 7.3% post-IPO, the lowest among its peers, indicating prudent capital management.
This financial strength positions Joby to weather the long development and certification process inherent to the eVTOL industry.
Institutional backing: Smart money sees potential
One of the most telling indicators of Joby's potential is the strong institutional interest in the company:
- Joby's institutional ownership stands at 41.5%, second only to Blade Air Mobility (70.5%) and essentially tied with Archer Aviation.
- This figure is significantly higher than competitors like Lilium (2%) and EHang (26.3%).
This relatively high level of institutional investment suggests that professional money managers see long-term potential in Joby's business model and technology.
Stock performance and analyst forecasts
While the eVTOL industry has faced headwinds since going public, evinced by an average decline in post-IPO share price of 58.4%, Joby's shares have been more resilient than most. Specifically, the eVTOL pioneer's shares have declined by 40.8% since their public debut, which compares favorably to either Lilium's (-92.4%) or Blade Air Mobility's (-65.2%) post-IPO performance.
This relative stability could indicate that investors are more confident in Joby's long-term prospects compared to its competitors. That said, analysts aren't uber-bullish on the stock -- at least not in the near term. The consensus price target implies an upside potential of just 14.8% over the next 12 months, which pales in comparison to the triple-digit upside projections for some of its competitors.
Key takeaways
Joby Aviation stands out as a leader in the emerging eVTOL space, with the highest market cap, a strong financial position, and significant institutional backing. Its vertically integrated business model offers potential for long-term value creation but also comes with substantial capital requirements and operational challenges.
For growth-oriented investors with a high risk tolerance and long-term horizon, Joby represents a compelling opportunity to invest in the future of urban air mobility. The company's financial strength and market position make it an attractive option for those looking to gain exposure to the eVTOL revolution. However, investors should be prepared for potential turbulence as the industry navigates the challenges of bringing this transformative technology to market.
