In 2023, leading flying car stocks soared to incredible heights. Unfortunately for many investors, this sector has since seen a sharp decline over the past year and a half. As the industry is still nascent and companies are in early stages of their business cycles, we could be due for more volatility on the horizon. Indeed, forecasting future cash flows for these companies isn’t an easy task, when most companies still need final regulatory approval to get their electric vertical takeoff and landing (eVTOL) aircraft in the skies.
That said, if this sector does turn out to be the next major growth area, there are some first adopters worth considering in this space. These companies are among the top options for investors looking to benefit from a first-mover advantage in this nascent sector.
Joby Aviation (JOBY)
Joby Aviation (NYSE:JOBY) stock corrected to roughly $5 per share from a peak of $12 in July 2023 amid a broader market downturn among flying car stocks. Despite this setback, Joby’s strategic partnerships stand out as a key catalyst for long-term investors. The company’s deals, including one with the Department of Defense, stand to provide consistent revenue over time. With plans for eVTOL commercialization in the U.S., UAE and Saudi Arabia markets, there’s certainly appeal for Joby’s growth profile.
The air taxi pioneer also notably obtained FAA approval for its in-house software suite, ‘ElevateOS’. This system facilitates efficient air taxi operations with pilot tools, scheduling software, a rider app, and a matching engine akin to ride-hailing apps. Joby plans to deploy ElevateOS for its own operations and offer it to aircraft buyers as a comprehensive service packages.
Joby emphasized the company’s unique air taxi concept, and its software/hardware integrations as a key selling point for investors. The company’s ElevateOS platform is aimed at providing seamless on-demand flights. If air taxis become akin to ride-sharing platforms, Joby could have a technological leg up on its competition.
Archer Aviation (ACHR)
San Jose-based Archer Aviation (NYSE:ACHR) is another air taxi company that’s making waves in this space. The company recently partnered with Signature Aviation to enhance private aviation terminals like those at Newark and Chicago O’Hare for United Airlines (NASDAQ:UAL). Archer expects that pilotless planes will serve major U.S. cities, providing quick access from private terminals to larger airports.
Signature Aviation’s extensive network will facilitate Archer’s operations across key cities such as New York, Los Angeles, San Francisco, and various Texas locations. Additionally, Archer and Signature will collaborate with Beta Technologies to install rapid recharging systems at Signature’s terminals, enabling electrification and future launches.
Notably, Archer is pursuing a dual strategy, targeting 50% gross margin from direct sales and 40% from ride-share services. This diversified approach supported its financial stability and ambitious growth plans, including limited U.S. expansion and international ventures in India and the UAE. Major partnerships with United Airlines and Stellantis bolstered Archer’s capabilities in manufacturing and market entry. With liquidity exceeding $520 million, Archer’s strong financial position enabled agile growth and strategic development.
EHang Holdings (EH)
Looking to carve out its niche the eVTOL sector is EHang Holdings (NASDAQ:EH). This China-based eVTOL maker continues to see strong demand for its shares due to relatively robust financials.
Notably, EHang expects to see consistent growth over the next 2-3 years, believing the company is poised for substantial returns. Recent milestones include receiving a production certificate from the Civil Aviation Administration of China for EH216-S aircraft and securing purchase orders from Wuxi and Xishan Tourism.
The flying car company also successfully conducted the maiden autonomous flight of its EH216-S eVTOL in Mecca, Saudi Arabia. This milestone, achieved in collaboration with Front End Limited Company and with support from Saudi authorities, highlights EHang’s safety commitment and technological prowess in urban air mobility. The initiative underscores the potential of pilotless eVTOLs to enhance efficiency and sustainability in Saudi Arabia’s transportation, particularly for the annual Hajj pilgrimage.
EHang has expanded its geographic footprint with demo flights in the UAE, Spain, Costa Rica, Japan, and its debut flight in Saudi Arabia, signaling promising growth prospects ahead. For those looking to bet on a global eVTOL sector, this is a top option to consider right now.
On the date of publication, Chris MacDonald did not hold (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.
