Joby Aviation (JOBY -2.51%) is one of the highest-potential companies in industrials today, building an entirely new way to get from Point A to Point B in cities around the world. Not only is the company developing a novel vertical take-off and landing vehicle, it's building an entirely new business model.
A decade from now, this will either be a company that failed to get off the ground, or a disruptive force in transportation. Let's look at what the path forward looks like.
Joby's foundation has been laid
The company is nearing completion of its testing program and is on the way to launching a short-distance air taxi service in Dubai in 2025. Recent guidelines from the FDA also pave the way to rules for pilots, and the company has nearly completed three of five stages of testing, moving forward with testing and analysis right now.
But until that testing is complete, this is still essentially a pre-revenue company.
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There are currently three production prototypes in operation, with another near completion, and to get an air taxi service going the company will need to expand the fleet quickly. But that's where a balance sheet with $710 million in cash at the end of the third quarter, $222 million in equity sales after the quarter, and a new $500 million investment from Toyota will be a valuable foundation to build from.
Where Joby Aviation is going
I think Joby's path over the next decade will come in three phases. The first will be proving the business model with a short-distance air taxi service in cities like New York, Dubai, and Los Angeles. This will be a high-ticket item for wealthy clients, but the goal is to prove the aircraft works at scale.
The second phase will be expanding the service area beyond some point-to-point flights. A 523-mile hydrogen-powered test flight has been completed and could open up longer distances and faster fueling than battery-only flights. New flights like New York City to Philadelphia or Los Angeles to San Diego, for example, would be possible with hydrogen as a fuel source. This could allow Joby to fit in between a helicopter and a private jet for clients.
The third phase will be autonomous flight, which took a huge step forward after the company acquired Xwing's autonomy division.
A decade from now, if Joby Aviation can fly fully autonomously for hundreds of miles, this could be an incredibly valuable air taxi service.
There's risk and reward with Joby Aviation
The risk with Joby is high. The company isn't generating significant revenue and is still around a year from getting commercial operations off the ground. But if those early operations succeed, this could be a transformative company.
Vertical take-off and landing opens up point-to-point transportation to and from nearly anywhere in the world. Airports are no longer the limitation, and we could see an Uber-like business model emerge. I think that upside could be well over 10x the $6.1 billion market cap we see today, and is worth the risk for long-term investors.
