1 eVTOL Stock That Could Turn $5,000 Into $50,000 -- and the 1 Risk That Could Wipe It Out
Key PointsJoby Aviation is arguably the “best in breed” play on the eVTOL market.
The burgeoning electric vertical take-off and landing (eVTOL) sector could potentially revolutionize short-range air travel due to its advantages of being quieter, more environmentally friendly, and suitable for urban environments. The market for eVTOLs is projected to expand at a remarkable 36.8% compound annual growth rate (CAGR) from 2026 to 2034, making it an opportune time to consider investing in pioneering companies in this field.
Joby Aviation (JOBY -0.32%), a leading player in the eVTOL industry, is developing the S4 model, a single-pilot, four-passenger aircraft capable of traveling up to 150 miles on a single charge and reaching speeds of 200 miles per hour. The aircraft's innovative single tilt-rotor propellers set it apart from competitors like Archer Aviation's Midnight, which employs separate propellers for lifting and cruising.
However, while Joby Aviation is nearing completion of the Federal Aviation Administration's (FAA) certification process for commercial flights in the U.S., the company faces a significant risk that could potentially wipe out its value. With interest rates on the rise, Joby may encounter difficulties securing loans at favorable rates. Previously, the company leveraged debt to fuel its expansion, but now, it has burned through an estimated $100-200 million in cash per quarter.
To bolster its liquidity, Joby has raised funds through two stock offerings and a convertible debt offering, leading to a 13% increase in its share count over the past year. Its total liabilities have surged by 156% year-over-year to $985 million as of the second quarter. Consequently, a recession could severely impact Joby's cash flow and liquidity, potentially halving its stock price, given its current valuation of ten times its projected 2028 sales.
Furthermore, a recession could prompt Joby's key partners, including Toyota for manufacturing, Delta for airport-to-home flights, and Uber for broader air-taxi operations, to cut back on spending. A decline in consumer discretionary and corporate spending would, in turn, negatively affect the demand for air taxi services. In essence, investing in Joby Aviation may not be advisable during a market downturn.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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