Why Joby Aviation Inc Is Bullish
Electric vehicles (EVs) have been garnering a lot of attention lately, and much investor enthusiasm has already been baked into most EV stocks.
Nonetheless, there’s a related sector that has yet to take off but has huge potential: the electric vehicle takeoff and landing (eVTOL) industry. One overlooked eVTOL company bucking the recent stock market sell-off is Joby Aviation Inc (NYSE:JOBY).
Founded in 2009, Joby Aviation is a California-based company developing all-electric aircraft for commercial passenger service. It was selected in 2012 to collaborate with the National Aeronautics and Space Administration (NASA) on several groundbreaking electric flight projects. (Source: “Our Story,” Joby Aviation Inc, last accessed July 5, 2022.)
Joby Aviation Inc’s eVTOL aircraft is expected to be used as a fast, quiet, all-electric air taxi service beginning in 2024. Its plane has six propellers that can be rotated for takeoff, landing, and propulsion. It boasts a maximum range of 150 miles on a single electric charge and can transport a pilot and four passengers at speeds of up to 200 miles per hour.
Instead of sitting in traffic and spending about 45 minutes driving from downtown New York City to JFK Airport, a Joby air taxi could get you there in seven minutes.
By 2015, the company had developed its current configuration and flew a subscale prototype for the first time. It flew its first full-scale prototype in 2017.
The real work began in 2019, with Joby Aviation Inc’s preproduction prototype entering a rigorous flight-testing program.
The company continues to make progress, with the majority of its large composite parts already manufactured. Moreover, work is underway on the tail and wing structural assemblies.
In March, Joby Aviation Inc announced that it had completed the build-out of 125,000 square feet of manufacturing space. It began the construction of its first production-intent aircraft at its pilot production facility in Marina, CA.
As of this writing, nearly 80% of Joby Aviation’s “means of compliance” certification has been accepted by the Federal Aviation Administration (FAA). The company has already submitted most of the remaining 20% for review and approval. (Source: “Shareholder Letter: Q1 2022,” Joby Aviation Inc, last accessed July 5, 2022.)
In March, Joby Aviation became the first eVTOL company to submit an area-specific certification plan (ASCP) to the FAA. That plan, which covers cabin safety, has been accepted by the FAA. The company has submitted two additional ASCPs for review.
Perhaps most significantly, Joby Aviation announced in May that it had received a Part 135 Air Carrier Certificate from the FAA. This allows the company to begin on-demand commercial air taxi operations. (Source: “Joby Receives Part 135 Certification From the FAA,” Joby Aviation Inc, May 26, 2022.)
This milestone will help Joby Aviation get to its goal of launching its eVTOL aircraft in 2024.
Joby Aviation Inc’s head of air operations and people, Bonny Simi, said the following:
The procedures we’ve prepared lay a foundation for our future eVTOL operations. Over the coming months, we will use our Part 135 certificate to exercise the operations and customer technology platforms that will underpin our multi-modal ridesharing service, while also refining our procedures to ensure seamless journeys for our customers.
Joby Aviation Inc needs two additional FAA certifications to fully operate its eVTOL aircraft as air taxis in the U.S.: a type certificate and a production certificate. The company has taken proactive measures to ensure it gets those final two certificates.
Expanding Global Footprint
Although Joby Aviation Inc’s initial focus is the U.S., that doesn’t mean it isn’t thinking globally.
In early February, Joby Aviation announced it was joining forces with SK Telecom Co Ltd (NYSE:SKM). The South Korean telecommunications company will introduce Joby Aviation’s air taxi services to cities and other communities in South Korea. (Source: “SKT and Joby Join Forces to Bring Air Taxi Service to South Korea,” Joby Aviation Inc, February 6, 2022.)
In mid-February, Joby Aviation announced that it had formed a partnership with ANA Holdings Inc (TYO:9202, OTCMKTS:ALNPF) to bring aerial ridesharing services to Japan. Toyota Motor Corp (NYSE:TM) is partnering with the two companies to assist in exploring ways to connect air taxis to ground-based transportation. (Source: “ANA Holdings and Joby Partner to Bring Air Taxi Service to Japan,” Joby Aviation Inc, February 14, 2022.)
In March, Joby Aviation said it would work with CAE Inc (NYSE:CAE), a global leader in aviation training. The partnership will help develop and qualify flight simulation training devices that will be used to train future Joby Aviation pilots. (Source: “Joby Partners with CAE for eVTOL Aircraft Pilot Training,” Joby Aviation Inc, March 9, 2022.)
In May, Joby Aviation announced that it had acquired Avionyx, an aerospace software engineering firm with a history of helping aviation companies secure FAA certifications. (Source: “Joby Aviation Acquires Avionyx to Accelerate Aerospace Software Certification,” TechCrunch, May 18, 2022.)
Not only does Avionyx have experience with the FAA, but the company has also worked extensively with the European Union Aviation Safety Agency (EASA).
Solid Financial Foundation
Despite all the good things happening at Joby Aviation Inc, it’s still a development-stage company, so it hasn’t been generating any revenue. As a matter of fact, it has been burning through cash. However, it has more than enough capital to get it to the finish line.
For the first quarter of 2022, Joby Aviation Inc reported a net loss of $62.3 million. Its total net cash for operating activities, including property and equipment purchases, totaled $72.3 million. The company ended the quarter with $1.2 billion in cash. (Source: “Joby Aviation Reports First Quarter 2022 Financial Results,” Joby Aviation Inc, May 12, 2022.)
Like most start-ups, Joby Aviation will move forward with new developments. Over the next two years, there will likely be a lot of news coming from the company that will move the gauge on JOBY stock.
Judging by the calls from Wall Street analysts, the news about the company is expected to be good. Of the analysts providing a 12-month share-price target for Joby Aviation stock, their estimates range from $6.00 to $12.00. This points to potential gains from JOBY stock in the range of 27% to 155%.
Joby Aviation Inc is an eVTOL company that is doing everything right. It’s been receiving critical FAA approvals, it has conducted thousands of hours of successful flights, it’s been inking new international partnerships, and it’s inching its way toward commercial production in 2024.
Two years might sound like a long time, but it isn’t, especially when you consider that JOBY stock will make big and small moves along the way. And once the company’s air taxis are in production and generating earnings, that could take Joby Aviation stock to an entirely different level.