Investors who are looking for the next big thing have landed on flying car stocks. Electric vertical take-off and landing (eVTOL) aircraft convey the promise of serving as flying taxis. Initially, applications could include taking passengers to and from airports in congested urban areas. As the industry unfolds, the theory is that individuals flying to and from work could become commonplace.
The reality is likely to be somewhere in-between. But there is some concern that investors may be getting ahead of themselves. Before flying cars become mainstream, they’ll have to receive regulatory approval.
Several of these companies are in the Federal Aviation Administration (FAA) certification program. But the wheels of government move at their own pace. That’s particularly true in an election year when one eye is on the ongoing inspections of Boeing (NYSE:BA) aircraft. It’s safe to assume that regulatory approval will be more arduous than thought perhaps four months ago. And that’s reflected in the price of flying car stocks which are down sharply in 2024.
However, if you’re an investor with a long-term outlook, this could be a buying opportunity. You may not know what the ceiling for these stocks will be. But if they live up to only half their potential, the prices of today will be the floor.
Let’s explore three flying car stocks to consider adding to your lineup this month.
Joby Aviation
Joby Aviation (NYSE:JOBY) makes most lists of flying car stocks based on the fact that it’s the furthest down the road towards receiving FAA certification. The company has completed three out of five certification stages and believes it will complete the certification process in early 2025.
However, the FAA’s own Innovate28 plan suggests that it will take until 2028 for commercial operations to achieve scale. One of the key issues regards assimilating eVTOLs into existing air traffic control patterns.
That puts JOBY’s approximately $900 million cash on hand in a different light. The company is still not profitable and expects to burn between $440 and $470 million in 2024. That increases the likelihood that the company will have to raise capital prior to breaking even.
Nevertheless Joby Aviation has contracts with the U.S. Department of Defense (DOD). Under terms of the contract the company will deliver aircraft in 2025. Also, it announced a partnership with Mukamalah Aviation to bring eVTOLs to Saudi Arabia.
And so, analysts remain generally bullish on JOBY stock with seven analysts giving it a consensus price target of $7.67. Notably, JPMorgan Chase (NYSE:JPM) upgraded the stock from underweight to neutral and assigned a $5 price target to JOBY.
Archer Aviation (ACHR)
Like Joby Aviation, Archer Aviation (NYSE:ACHR) is in the FAA certification process. Although only completing the first stage of the process, it still targets 2025 for commercial ride sharing operations. However, as noted above, starting operations and delivering at scale are two different timelines.
Regardless, the company has existing partnerships with United Airlines (NASDAQ:UAL) and Stellantis (NYSE:STLA). The partnership with United ensures that Archer will have customers upon FAA approval. The Stellantis partnership will aid the company’s manufacturing efforts in fulfilling its $3.5 billion backlog of aircraft orders.
Another bonus the partnerships give Archer is cash. The company has approximately $1 billion on its balance sheet. It expects a minimum of $750 million will be required to go to market. Additionally, as of March 2024, the company reported $520 million on its books as a liquidity buffer. So that should give the company sufficient capital to get production to scale.
Eve Holding (EVEX)
If you’re looking beyond the U.S. market for flying car stocks, Eve Holding (NYSE:EVEX) is a name to consider. The company, which is a subsidiary of Embraer, is essentially the Joby Aviation or Archer Aviation in Europe and particularly the Middle East.
EVEX is a little behind those companies, however, in that it does not have a prototype in the certification process. It has started the certification process with the Brazilian Air Authority and is aiming to achieve dual certification with the U.S. FAA by 2026.
This means, like other flying car stocks, you should focus on orders and liquidity. Eve Holding has non-binding letters of intent (LOIs) for 2,850 aircraft. Furthermore, the company reports having $300 million on its books which it believes is enough cash to get through 2025.
Finally, the consensus price target of eight analysts for EVEX stock is $8.20, which is a 42% upside. And four of those analysts offer a strong buy rating. It’s also noteworthy that EVEX stock only has about 3.8% short interest as opposed to the over 20% short interest carried by both JOBY and ACHR stock.
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.
