Blade Air Mobility: My First Trade For Monday (NASDAQ:BLDE)

“A person does not grow from the ground like a vine or a tree, one is not part of a plot of land. Mankind has legs so it can wander.“― Roman Payne, The Wanderess

Blade Air Mobility, Inc. (NASDAQ:BLDE) goes into the spotlight for the first time as our feature article of the day. The company came public via special purpose acquisition company or SPAC late in 2020. Like most small cap firms birthed this way during this ‘vintage‘, BLDE stock has destroyed a lot of shareholder value since it debuted on the market. The company is aiming to be the Lyft or Uber of Urban Air Mobility ride shares.

Fourth quarter results should be posted in the coming week and just over three weeks ago a private equity firm named RedBird Capital Partners took a more than 5% stake in this air-mobility company. A potential sign of a turnaround? An analysis follows below.

Company Overview:

Blade Air Mobility, Inc. is located in New York City. The company provides transportation services through charter and by-the-seat flights using helicopters, jets, turboprops, and amphibious seaplanes. The company operates as an asset-light business concern.

The stock trades right at $4.25 a share and sports an approximate market capitalization of $300 million.

The company operates in several mobility segments. In September of 2021, Blade Air Mobility purchased Trinity Air Medical for an upfront price of ~$23M and potential additional contingent consideration. The company continued to add transplant centers and Organ Procurement Organizations throughout 2022. These transactions have greatly expanded the footprint of the company’s MediMobility Organ Transport business, which benefits from multi-year customer contracts, low marketing costs and inelastic demand that is pretty much recession proof.

The company’s Short Distance business offers helicopter services over short distances. This includes Blade Airport which offers service between Manhattan and both JFK and Newark airports. The company closed on an approximate €48 million purchase last summer of asset-light commercial passenger businesses of three urban air mobility operators. An earlier smaller acquisition established the company in Canada. This business will eventually transition to Electric Vertical Aircraft or EVAs. The company also has a small jet charter service.

Third Quarter Results:

On November 9th, Blade Air Mobility posted third quarter numbers. The company had a net loss of $9.2 million for the quarter even as revenues soared 125% on a year-over-year basis to $45.7 million. Top line results beat the consensus by some $7 million. Net loss was comparable to the same period a year.

Thanks to recent acquisitions, revenues from the company’s MediMobility Organ Transport division soared some 800% to $20.2 million from 3Q2021. Leadership added this color to those results within the company’s third quarter press release:

Assuming Blade had owned Trinity in the prior year period, organic revenue growth in MediMobility Organ Transport would have been 174% versus the prior year period, driven by the acquisition of new hospital clients and continued growth with existing accounts.”

Blade ended the third quarter with a total of 67 hospital and organ procurement organization clients, up from under 30 at the start of 2022.

Revenues from Blade’s Short Distance business advanced 52% to $20.4 million. Growth was boosted by recent acquisitions and also improved pricing and utilization across Blade’s route network, and growth in Blade’s Airport service. Jet and Other revenue increased 9% to $5.1 million thanks to higher prices for charter jet trips.

Total corporate expenses drop to 43% of overall sales from 70% in the same period a year ago.

Analyst Commentary & Balance Sheet:

Since third quarter results came out, four analyst firms including Oppenheimer and Citigroup have reiterated Buy/Outperform ratings on BLDE. Two contained a downward price target revision, it should be noted. Price targets proffered range from $6 to $11 a share.

Approximately seven percent of the outstanding float is currently sold short. Insiders have been frequent but generally small sellers of the shares over the past year. They sold just over $200,000 worth of shares collectively in the fourth quarter and have approximately $80,000 worth of equity so far in 2022. The company ended the third quarter with just over $200 million worth of cash and marketable securities on its balance sheet and no debt. The company has burned through approximately $67 million worth of cash over the past two quarters to cover operational costs and acquisitions.

Verdict:

The company should have just under $180 million of sales in FY2022. The two analyst firms that covered this name project that revenues will grow substantially ($267.6 million and $309.5 million are the two current analyst firm estimates) in FY2023.

The company has a large opportunity just in the NYC area as well as good future potential in the heavily traveled Northeast corridor.

The company’s MediMobility Organ Transport provides a stable revenue base. The onramp of EVAs should marginally improve economics for the company as well.

Add in that nearly two thirds of the company’s current market cap is represented by net cash on its balance sheet, BLDE seems a nice ‘sum of the parts‘ story worthy of a small ‘watch item‘ position while awaiting the next set of quarterly data points which should be out in short order.

“The freedom I treasure most is the freedom to get up and leave.”― Marty Rubin