Joby Aviation: A True ‘Jetsons’ Stock (NYSE:JOBY)

The future is a hundred thousand threads, but the past is a fabric that can never be rewoven.”― Orson Scott Card

Today, we shine the spotlight on Joby Aviation, Inc. (NYSE:JOBY) for this first time. This Busted IPO is in an emerging industry that could be right out of ‘The Jetsons‘, the ‘Air Taxi’ business.

Company Overview

Joby Aviation, Inc. is based in Santa Clara, CA. The company is focused on building electric vertical takeoff and landing aircraft that will be optimized to deliver air transportation as a service as well as creating an aerial ridesharing service also known as an air taxi business. The company is vertically integrated in that it is tasked with making the majority of the parts of its aircraft. It also will assemble/test these aircraft as well as launch and operate its ride sharing service. The stock currently trades for around four bucks a share and sports an approximate market capitalization of $2.5 billion.

Third Quarter Results:

The company reported third quarter numbers on November 2nd. The company posted a GAAP loss of 14 cents a share roughly in line with expectations.

Certification Process:

The main focus of the company right now is to get its aircraft through the aviation certification process so its vehicles are approved for flight. Joby can then fully ramp up manufacturing and start to operate its air taxi business. As it stands now, the company should be able to begin operating that ride sharing service in 2025 provided it continues to execute effectively against its certification timeline. In mid-December, management announced the successful completion of the second of four system reviews required by the Federal Aviation Administration. In the third quarter, management also submitted their first equipment level qualification test plan to the FAA which has now been accepted.

Initial service operations for the Air Force should begin a bit earlier in 2024 and Joby has a current $75 million contract with the Department of Defense along these lines. Delta Air Lines (DAL) has made a $60 million equity investment in Joby on the commercial side. The airline can invest another $140 million in two stages upon successful completion of key milestones. Joby is also working with the airline to develop a seamless home to seat experience for their customers, fully integrated into the Delta ticket buying platform.

Finally, Joby has a long standing agreement with Uber Technologies, Inc. (UBER) to integrate each business into the other’s apps, which will give Joby access to a huge customer base.

Analyst Commentary & Balance Sheet

The analyst community is currently negative about the company’s current prospects. Since third quarter results were posted, JPMorgan ($6 price target), Barclays ($4.50 price target) and Deutsche Bank ($6 price target) have all reissued Hold/Neutral ratings on the stock. Morgan Stanley seems the lone optimist on the stock with a Buy rating and $11 price that was last reiterated the day after fourth quarter numbers were disclosed.

Approximately 14% of the outstanding float in the shares are currently held short. Insiders were consistent and frequent sellers of the stock in the back half of 2022. That selling has continued in 2023 as several insiders have sold approximately $1.3 million worth of shares in aggregate so far in January.

The company’s balance sheet remains in good shape with just under $1.1 billion in cash and marketable securities as of the end of the third quarter. The company burned through $74 million worth of cash during the quarter to fund operations. For the first nine months of FY2022, Joby Aviation used $207 million to support its operational/manufacturing buildout. The company has no long-term debt.

Verdict

The analyst consensus has the company losing 50 cents a share in FY2022 followed by a 60 cent a share loss in FY2023. No revenue is expected in either fiscal year, obviously.

Joby Aviation came public in the spring of 2021 during the massive IPO/SPAC wave that was fueled by very accommodative monetary policy by the Federal Reserve and near zero percent interest rates. It did so via a SPAC merger with Reinvent Technology Partners. Like most stocks that debuted on the market from this ‘vintage‘, JOBY has destroyed substantial shareholder value since it came public despite progressing on numerous fronts.

As highlighted in a recent article, Joby Aviation does seem a half year or so ahead of rival Archer Aviation (ACHR) in the certification process. Its balance sheet is also in slightly better stead equating for cash burn rates. If all goes according to plan, Joby plans to produce just over 100 aircraft in 2024 and approximately 250 in 2025. My guess is the company does some sort of additional capital raise to support that rollout in 2024, hopefully when credit markets have become more conducive to do so.

The potential Air Taxi market is huge and Joby could see impressive revenues in out years if it comes close to its SPAC roadshow projections as a Seeking Alpha article in November noted. If we were in ‘risk on‘/low interest rate market, I would probably take a small ‘watch item‘ position in JOBY.

Unfortunately, that is not the market environment we find ourselves in here in 2023. One of the reasons the current analyst commentary around this name is not positive at the moment. Therefore, I will keep an eye on this intriguing name and plan to circle back on it further along in its certification process.

People are like dice. We throw ourselves in the direction of our own choosing.”― Jean-Paul Sartre