Contemplating a Purchase of Joby Aviation Stocks at Less Than $7.50?
Elevated taxis might revolutionize travel, boasting enormous potential benefits. As per Morgan Stanley, the market worth of urban air mobility could reach an astounding $1 trillion by 2040, potentially soaring to $9 trillion by 2050. Recently, the Federal Aviation Administration (FAA) introduced regulations for these aerial vehicles, marking a crucial advancement towards their realization.
The environment for this industry is still in its infancy, but Joby Aviation (-7.03%) is among the foremost companies setting the pace. With financial support from Toyota Motor, Joby is progressing rapidly in constructing and manufacturing this groundbreaking technology.
Given that Joby's stock is priced at less than $7.50 per share, investors may ponder if the present is the ideal moment to enter this emerging market. Let's delve into the business, market trends, and forecasts for the upcoming years.
Joby's flying apparatuses could redefine transportation as we comprehend it
Joby Aviation has been designing electric vertical takeoff and landing (eVTOL) aircraft for over fifteen years. These flying devices take off, land, and hover vertically, powered by electric motors fueled by modern battery technology. This technique of transportation resembles a helicopter but offers quieter operation due to electric motors while minimizing pollution from emissions.
One of the allures of eVTOLs is their potential to operate in confined spaces. The technology could potentially revolutionize urban transportation, eradicating gridlock traffic on land. Additionally, rapid transport of emergency medical supplies or packages could become efficient and effective.
Over the last couple of years, Joby has witnessed considerable advancement in their vehicles, completing beyond a thousand test flights and drawing closer to earning airworthiness certification from the FAA.
Presently, one of Joby's primary rivals is Archer Aviation, but the two companies follow divergent strategies in their businesses. For instance, Joby is a vertically integrated company that produces and manufactures its components and systems in-house, contrary to Archer's reliance on traditional aerospace suppliers.
By producing parts internally, Joby could create a higher-performing eVTOL with increased altitude and range, yet at the cost of higher expenses. On the other hand, Archer's strategy involves reduced initial investments, permitting it to operate more efficiently and potentially enter the market sooner.
Creating this new technology is no small feat, and it necessitates the support of financiers to bring it to life. Lately, Toyota Motor pledged to invest an additional $500 million in Joby, aiming to construct a manufacturing alliance to support the initial phase of commercialization. This supplements Toyota's investment by $894 million, granting Joby $1.4 billion in funding and resources, extending its financial runway as it continues to spend.
What lies ahead for Joby?
In October, the FAA took an essential step towards the future of advanced air mobility (AAM) travel by issuing its final Special Federal Aviation Regulation (SFAR) on powered-lift pilot certification and operation. The new rule accelerates the prospect of widespread air taxi adoption and is viewed as "broadly positive" by the investment bank Canaccord.
This month, Joby Aviation revealed that construction on the first vertiport in its planned Dubai air taxi network has commenced. Located at Dubai International Airport (DXB), the vertiport is being built by Dubai Road and Transport Authority, or RTA, and Skyports. The facility will include two takeoff and landing stations, each equipped with Joby's Global Electric Aviation Charging System to support swift battery charging and preparation between trips.
The vertiport at DXB is the first of four locations that will form the core of Joby's network of vertiports, with an intended debut in 2025. Three additional vertiports are planned for development in Palm Jumeirah, Dubai Downtown, and Dubai Marina.
Is Joby Aviation a buy?
Joby Aviation is among the pioneering companies in the development of eVTOL technology, which could revolutionize urban transportation. The company has made impressive progress in achieving this stage, and regulators are taking steps to make this technology a reality. The company is also financially stable, benefiting from recent investments by Toyota.
That being said, Joby's stock is largely driven by stories for the time being. Completion of the necessary approvals from regulators, manufacturing expansion, and commercial operations are all time-consuming processes. Additionally, it might take longer for the public to embrace this mode of travel on a scale that generates substantial profits for the innovator. Joby's growth trajectory is still in its infancy, and its story will unfold over years, making the stock suitable mainly for aggressive investors with a long-term investment perspective.
Given the potential of eVTOL technology to revolutionize urban transportation and Joby Aviation's advancements in this field, investors might be interested in diversifying their portfolio by investing in the company. Joby has secured significant financial support from Toyota Motor, which could further boost its efforts in constructing and manufacturing eVTOL aircraft.
As Joby continues to make progress in its vehicles and approaches airworthiness certification from the FAA, the company's expenses will rise due to their vertical integration strategy. However, Toyota's additional investment of $500 million will extend Joby's financial runway, allowing it to continue its work in bringing eVTOL technology to market.
