Joby Aviation (NYSE:JOBY) stock stands to gain from being part of an industry poised for serious growth over the coming years. According to Bank of America, eVTOL deliveries will grow at a CAGR (compound annual rate) of 62% through 2030, with the number of aircraft in service expected to surpass 250,000 by 2045.
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Joby, which is developing a quiet, all-electric air taxi capable of carrying four passengers at 200 mph, appears well-positioned to make the most of this opportunity. However, there’s one key issue to remember here: Joby is still at the pre-revenue stage, and it commands a market cap of nearly $7 billion. And that, says investor Pythia Research (PR), “embodies sheer investor hope.”
“With a ~$7 billion valuation and no commercial revenues, Joby effectively trades at infinite forward earnings and sales multiples,” PR goes on to say. “Such a valuation is 100% based on execution as it trades at very high forward Price/Sales multiple, reflecting a nearly pure speculative premium.”
That’s not to say the company can’t grow into such a valuation. If Joby ramps up to delivering hundreds of aircraft per year by 2027, as suggested by its production plans and commercial trajectory, PR thinks its current valuation “could be justified or even conservative.” On the other hand, if things don’t go according to plan, namely if there are delays in certification or weak market uptake, that could lead to significant downside for investors.
While Toyota’s $500 million investment and hands-on support in manufacturing help ease liquidity concerns and boost credibility, until Joby shows stronger orders or positive cash flow, PR believes regulatory and capital risks remain key concerns.
Nevertheless, looking at the company’s objectives, PR thinks they are not merely pipe dreams. Management aims to launch service in Dubai by 2026, secure FAA certification by the end of 2025, and start U.S. commercial flights soon after. While ambitious, these timelines are realistic considering the FAA’s “reported engagement” and Joby’s progress, having submitted 62% of the remaining FAA Stage 4 documents out of over 13,000 total.
As the current regulatory and manufacturing front-runner with early military monetization via contracts with the U.S. Department of Defense (DoD), and global JV partnerships, especially through its partnership with Virgin Atlantic in the UK, Joby is “uniquely positioned” to capture a dominant share of the market. “If the company converts its certification lead and capital-light global model into scaled commercial deployment, its EV could represent just the beginning of a multi-decade compounding story,” PR summed up.
All things considered, Pythia Research views Joby as a standout in the emerging eVTOL space and believes the stock presents a compelling entry point at current levels, assigning it a Buy rating. (To watch Pythia Research’s track record, click here)
Amongst Walls Street’s analysts, Joby claims a mix of 3 Buys and Holds, each, and an additional 1 Sell, for a Moderate Buy consensus rating. Going by the $8.86 average target, a year from now, shares will be changing hands for a 0.34% premium — not exactly something to write home about. (See Joby stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.