Joby Aviation stock (NYSE:JOBY) stock has a market capitalization of $3.47 billion, 48% less than the valuation for Trump Media & Technology Group (NASDAQ:DJT).
How crazy is that?
While I’ve never really understood investor interest in electric vertical take-off and landing (eVTOL) aircraft, whether for air taxis or other uses you can envision, it’s even harder to understand why investors would give more love to Truth Social. This app was probably created by a 10-year-old tech geek rather than Joby, a company that is creating potentially game-changing technology.
Motley Fool recently estimated that the urban air mobility (UAM) market could reach $1 trillion by 2040 and $9 trillion by 2050. That’s significantly higher than any TAM (total addressable market) TMTG could be battling for over the next 20-30 years.
There’s no question the UAM market potential is tremendous. However, potential doesn’t pay the bills.
Here are three reasons why I would favor Joby Aviation stock over TMTG despite the current market cap differential. It’s a Buy for aggressive investors only.
Current Revenues and Losses
Joby generated $1.03 million in revenue in 2023, all of it in the fourth quarter. This revenue was the first in its history, reflecting flight services provided to the U.S. Department of Defense. The gross margin on those flight services was healthy at nearly 81%.
The operating losses in 2023 were $472.1 million, up from $392.2 million a year earlier. In 2023, money spent on research and development (R&D) was $367.0 million, with $105.9 million in selling, general and administrative (SG&A) expenses.
If this were a mature healthcare company—Johnson & Johnson (NYSE:JNJ) spent $15.09 billion on R&D in 2023, accounting for 17.7% of its annual revenue—Joby would need to generate $2.07 billion in annual revenue to match JNJ’s R&D expense margin.
Operationally, it’s a long way to go before it hits this margin.
Trump Media had $4.1 million in revenue and $16.0 million in operating losses in 2023, with $9.7 million in R&D, down 29% from a year ago. In 2021, Twitter’s last full year as a public company, its R&D margin was 24.7% on $5.08 billion in revenue.
There is no way Trump Media will get close to $1.25 billion in annual R&D expenses.
Plans for the Future
Joby Aviation stock continues to prepare its business for commercial operations.
In January, three pilots from Joby carried out 31 flights on Jovi’s eVTOL aircraft over two days in front of members of the Federal Aviation Administration’s (FAA) Office of Airports. That brings its total flights to date to over 100.
In addition, it continues to carry out simulations in the Dallas-Fort Worth area in partnership with the National Aeronautics and Space Administration (NASA).
“During the simulation, air traffic controllers were able to integrate up to 120 eVTOL operations per hour — arrivals and departures — from DFW Airport’s central terminal Area,” states Joby’s 2023 shareholder letter.
Five stages must be completed before it is ready for commercial operations. It has completed FAA certification for three of those, suggesting it could be up and running by 2025.
It means another year of steep losses.
In 2023, it burned through $314 million in cash, up from $236 million in 2022. It could burn through more than $410 million in 2024. Fortunately, its balance sheet has more than $1.03 billion in cash, cash equivalents, and short-term investments.
It should be able to carry out regular operations in 2024 without a hiccup.
Board Composition
This is where Joby considerably outshines TMTG, and for good reason. It operates aircraft that will fly actual passengers, putting them at risk daily. That requires an exceptionally capable board of directors.
Founder and CEO JoeBen Bevirt has been involved in developing electric propulsion and robotics products for more than two decades. Board member Aicha Evans has over 20 years of experience leading engineering teams. She’s currently CEO of Zoox, Amazon’s (NASDAQ:AMZN) robotaxi business in development.
Laura Wright helped establish Southwest Airlines (NYSE:LUV) over 25 years at the company. Lastly, Michael Heurta served as Adminstrator at the FAA between 2013 and 2018. He also serves on the Delta Air Lines (NYSE:DAL) board, my favorite airline.
Five of the nine current directors have work experience in engineering or air transportation-related businesses. The other four include the co-founders of LinkedIn and Pinterest (NYSE:PINS). It’s a first-rate group.
Except for Eric Swider, none of Trump Media’s seven-member board has media or technology experience. They’re primarily Trump supporters. At least Elon Musk got an experienced ad executive in Linda Yaccarino, the former head of ad sales for NBCUniversal.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.