Shares of electric vertical takeoff and landing (eVTOL) Joby Aviation (NYSE:JOBY) marched higher on Friday amid a soft backdrop on Wall Street. Catalyzing the move northward was management’s announcement of a $9.8 million grant from the California government. Earlier, JOBY stock benefited from unusually bullish activity in the options market, highlighting the high-risk, high-reward opportunity.
According to the accompanying press release, the Governor’s Office of Business and Economic Development (GO-Biz) awarded the grant under the California Competes program. Primarily, the main purpose behind the funding centers on supporting the eVTOL maker’s continued statewide expansion. Specifically, the grant will assist in financing a major buildout of Joby’s facilities in Marina, California.
Per the official statement, this initiative will support higher manufacturing volumes and initial trailing for pilots and aircraft maintenance crew. In addition, the money will go toward ongoing hiring at Joby’s other California-based facilities in San Carlos and Santa Cruz. Further, under the agreement, Joby has committed to invest $41.3 million. It will create 690 additional full-time jobs in the Golden State by 2027.
Perhaps most significantly, the grant will enable Joby to effectively accelerate its ongoing type certification program with the Federal Aviation Administration (FAA) as well as for initial commercial operations. The latter directive should begin in 2025.
JOBY Stock Rises on Speculative Interest
While the rise of JOBY stock on Friday was conspicuous based on the underperformance of the major indices, it’s been on a robust rally in recent sessions. In the trailing five days, it gained roughly 17%. Certainly, much of the enthusiasm stems from the excitement of eVTOL aircraft and the potential paradigm shift it may engender.
However, JOBY stock also has witnessed a strong boost in unusually optimistic derivatives market trading. On Nov. 13, Fintel’s options flow screener — which exclusively filters for big block trades likely made by institutions — shows significant activity for the Apr 19 ’24 6.00 Call. Mainly, traders bought 4,976 contracts of this call option, paying a premium of $396,053.
According to Fintel, the magnitude of this premium relative to historical transactions involving JOBY stock options clocked in at 12.56 standard deviations above the median. Obviously, that’s a hefty wager. Even better, on Nov. 14, major entities acquired 3,440 contracts of the Apr 19 ’24 7.00 Call. The premium paid came out to $221,000, or a standard deviation of 1.2 above the median.
Both contracts show robust open interest. In the case of the $7 call, open interest increased from 3,646 contracts on Nov. 15 to 3,874 contracts two days later, indicating rising bullishness (assuming that the transaction is not part of a complex, multi-tiered strategy).
Why It Matters
Within the past three months, TipRanks shows that the analyst rating for JOBY stock is a consensus moderate buy. However, sentiment is mixed, breaking down as two buys and one sell. Also, in July of this year, Deutsche Bank issued a “sell” rating against JOBY. Overall, the average price target lands at $8.67, implying about 42% upside potential.
On the date of publication, Josh Enomoto 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.
