JOBY Aviation (NYSE:JOBY) is among the leading companies growth investors considering the electric vertical takeoff and landing space consider.
A rising star in air mobility, Joby Aviation stock currently changes hands for around $6.50 apiece. Notably, this stock has been on the downtrend in recent weeks, despite a strong rally this year.
Currently, JOBY stock still trades at levels that are nearly double where it started the year.
Thus, this is a rather confusing stock to consider at these levels. Will the downside momentum continue? Or will Joby’s long-term growth prospects in the air taxi market take it higher?
Here’s why I think Joby Aviation is a compelling speculative growth stock at these levels, particularly for those thinking about the future of transportation.
Recent JOBY News
Joby revealed a groundbreaking development on September 12, 2023. The company secured an exclusive U.S. Patent #11752899 for their innovative high-altitude thermodynamic fuel cell system and hydrogen-powered aircraft, known for its remarkable efficiency.
The specifics of this patent remain undisclosed, enhancing the curiosity about Joby Aero’s technological strides.
Joby has a history of aviation innovation, securing a patent for a high-altitude aircraft hydrogen fuel system. This unique system raises air pressure with compressors and cools it using liquid hydrogen, optimizing fuel cell performance.
The company broadened its hydrogen aviation presence with the acquisition of H2FLY, a leader in hydrogen propulsion for aircraft.
This strategic move enabled Joby to achieve a major milestone – the world’s first piloted flight of a liquid hydrogen-powered electric aircraft. H2FLY’s founder, supported by Joby Aero, envisions a future where hydrogen fuel cells play a pivotal role in aircraft development.
Joby Aviation Is Strong and Resilient
Joby Aviation, although pre-revenue, holds promising opportunities. It secured a $131 million contract with the U.S. Air Force, set to begin in 2024, primarily for logistics applications.
The company introduced its inaugural full-scale production prototype, tested at Edwards Air Force Base. Notably, this prototype showcases a repeatable and scalable production process.
Assessing Joby Aviation’s value is complex due to its lack of revenue. Currently, its market capitalization stands at $4.8 billion, approximately four times its cash holdings. In terms of share price, it remains 53% lower than its peak of $15 per share in February 2021.
Other factors to consider
Institutional investors express growing confidence in Joby Aviation with a 30% increase in 13F holdings and a 94% surge in new positions, as per Whale Wisdom. A declining put/call ratio suggests waning bearish sentiment.
Joby’s robust financial position, ending Q1 2023 with $978 million in cash and securing an additional $180 million in May, appeals to major investors compared to peers.
JOBY Aviation, funded at $700+ million with key partnerships, despite a Q2 $286 million loss for aircraft development, remains financially robust with almost $1.2 billion in cash and investments, bolstered by recent institutional support.
The cash usage is typical for growth stocks, posing no immediate liquidity concerns.
What Now
The flying taxi industry is high-risk but promising. Joby Aviation, with Uber and Delta partnerships and Toyota investment, stands out. The main concern is a potential public crash in 2024, a risk as the industry is closely monitored despite fewer accidents compared to helicopters.
Over the long-term, this sector is one that’s likely to be regulated, and the best operators will win. In that regard, the jury is still out whether Joby is the best pick in this space.
However, it’s among the more compelling options for investors looking for companies with first-mover advantages in this sector. I’m considering adding a diversified position on this space, betting on a few of the top eVTOL companies.
On the date of publication, Chris MacDonald 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.