Investors should keep an eye on the flying cars or electric vertical take-off and landing aircraft sector in 2024. It is projected to reach $97 billion by 2030, growing at an annual rate of 11%.
However, the projected growth for the industry in 2022 was only expected to reach $30 billion by 2030. Given the forecasted surge in growth, now is the perfect time to analyze the flying car stocks worth monitoring.
The opportunity from investing in flying cars becomes apparent when you consider some baseline applications.
Shuttling passengers to and from airports, disaster relief, and ensuring medical care and assistance can get to remote areas. There will be others, but those three alone helps outline the opportunity.
But this is not an area that comes without risk. Safety is a paramount concern. Flying cars will have to meet FAA requirements, which are likely still being written. Then there’s regulation. This is a new category of aircraft that will have to be accounted for with current air traffic patterns. And of course, there’s the cost to build. Like electric vehicles, building EVTOLS is a capital-intensive business.
Those risks are why many flying car stocks are penny stocks. That’s fertile ground for day traders and swing traders. And it means there can be sharp price swings in these stocks.
The bottom line is that this is currently not a sector for every investor. But if you have a long-term outlook and the ability to speculate in a sector that assuredly will be volatile, here are three flying car stocks to watch in 2024.
Vertical Aerospace (EVTL)
Vertical Aerospace (NYSE:EVTL) makes this list of flying car stocks to watch because it already has a contender in the field.
The U.K. company’s protype VX4 can hold 4 passengers, plus a pilot, and travel up to 100 miles. The company is targeting 2025 as the year it begins commercial operations.
That presumes it can achieve its goal of FAA certification in 2024. To that end, the company has logged over 1,000 test flights.
However, as previously mentioned, safety and the costs associated with production are two significant obstacles for eVTOL companies. Vertical Aerospace has concerns in both areas. The company faced a setback in August when its prototype VX4 crashed in the Cotswold region of the UK.
The company also reported that at the end of the quarter it had the U.S. dollar equivalent of $93.9 million on hand. However, it would have a cash burn of approximately $100 million in the 12 months ending in September 2024.
The company has subsequently issued a going concern warning. And it received a delisting notice from the New York Stock Exchange (NYSE) because the EVTL stock price has been below $1 for 30 consecutive trading days.
As a long-term investor, you may take comfort because Vertical has several notable investors, such as Microsoft (NASDAQ:MSFT), Boeing (NYSE:BA), and American Airlines (NYSE:AAL).
Perhaps one of these companies will step up to expand their partnership without the company having to raise capital in a higher interest rate environment. However, this will be something to watch closely.
EVE Holding (EVEX)
At first glance, EVE Holding (NYSE:EVEX) may seem like a late entrant into the eVTOL field. The company is not forecast to begin commercial production until 2026.
However, this may be a case where being right is better than being first. Undoubtedly, this company will use the learnings from companies such as Vertical Aerospace as it gets a prototype ready for testing.
EVE Holding is controlled by the Brazilian plane manufacturer Embraer SA (NYSE:ERJ) which has over 50 years of industry experience. That should be invaluable, as the company navigates the safety and regulatory issues that are a part of this sector.
Plus, the company is focusing on a narrow niche, that of urban air mobility vehicles. EVE has several commitments in place, including a commitment for 200 eVTOLs from United Airlines (NYSE:UAL), a key investor in the company.
EVEX stock is up about 2% this year. That’s despite a sharp sell-off of over 31% in the last six months. Long-term investors should keep in mind that short interest is not high as a percentage of the float, but it remains elevated since the summer.
Also, institutional investment is low. However, it’s good to see that institutions are doing more buying than selling.
Joby Aviation (JOBY)
Of the three flying car stocks to watch on this list, Joby Aviation (NYSE:JOBY) may present risk-averse investors with the best risk-reward ratio.
Joby is the farthest along regarding FAA approval. For example, in late December, the company successfully completed a series of air traffic simulations.
The simulations were done with NASA’s Ames Research Center to determine how flying cars (i.e. air taxis) can work into the airspace.
Even in the best-case scenario, Joby won’t be starting commercial operations until 2025. However, the company has over $1 billon on its balance sheet. It shouldn’t have a problem getting across the finish line.
With that being the case, JOBY stock may be undervalued. However, investors should be mindful of the high short interest on the stock (over 19% as of this writing). But if you’re looking for an opportunity that may offer a reward sooner rather than later, Joby Aviation is one to watch.
On the date of publication, Chris Markoch 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.
