Electric air taxis aren’t just science fiction anymore; they’re becoming a reality in the 2020s. Joby Aviation (NYSE:JOBY) is rapidly advancing the latest and greatest in flying car technology — and if you want a piece of the action as an investor, consider JOBY stock.
Reportedly, the Federal Aviation Administration’s (FAA) timeline proposes that urban air taxis could commence service over U.S. cities as early as 2028. However, Joby Aviation clearly doesn’t plan to wait that long to fully commercialize its aircraft.
Granted, it Joby Aviation isn’t profitable and might not be income-positive for a while. So, investors can aim for the skies but should also be patient and realistic. With that in mind, let’s strap in and take a brief but exciting trip with Joby Aviation.
Joby Aviation Has Government Backing
As mentioned earlier, the FAA’s timeline suggests that you might not see air taxis flying over U.S. cities until 2028. However, this doesn’t mean that the FAA and other government entities are preventing Joby Aviation from achieving its near-term goals.
First of all, I should clarify that Joby Aviation builds electric vertical takeoff and landing (eVTOL) aircraft. These vehicles can take off vertically but then fly like an airplane. Furthermore, they’re generally designed for commercial passenger flight — but Joby Aviation’s aircraft evidently have government support.
In fact, Joby Aviation reportedly has a contract with the U.S. Air Force, valued at “up to $131 million.” In accordance with this arrangement, Joby Aviation plans to move an eVTOL aircraft to Edwards Air Force Base in 2024.
In addition, the FAA granted Joby Aviation “a Special Airworthiness Certificate.” This is for Joby Aviation’s “first aircraft built at its Pilot Production Line in Marina, California.”
Did JOBY Stock Get Ahead of Itself?
Along with all of that, Joby Aviation submitted its Stage Three (out of five stages) Certification Plans to the FAA. This, according to Didier Papadopoulos, head of Aircraft OEM at Joby Aviation, represents “another step towards launching commercial service in 2025.”
In other words, Joby Aviation is targeting 2025 even if the FAA is looking at 2028. And again, Joby Aviation hopes to have at least one aircraft delivered to an Air Force base in 2024.
Hence, Joby Aviation’s runway to full commercialization might be faster than some skeptics would expect. Still, JPMorgan analysts are apparently quite skeptical, or at least cautious.
They reportedly downgraded JOBY stock from “neutral” to “underweight.” Moreover, they cited a “largely overblown rally” in the shares, which have more than doubled in price year-to-date.
I understand their concerns. Joby Aviation is a start-up business in a largely undeveloped niche industry. There’s a lot of risk for Joby Aviation’s investors, especially after a meme-like share-price rally.
Try a Small Stake in JOBY Stock
The JPMorgan analysts have a fair point, so it’s wise for investors to hedge their bets. Don’t over-invest in Joby Aviation; instead, maintain a very small position size and prepare for volatility.
At the same time, we can’t deny Joby Aviation’s government support and steady progress toward profiting from its futuristic aircraft. Joby Aviation’s management is confident that the company can commence commercial service in 2025, and so am I.
Therefore, I’m targeting $20 by 2025 for JOBY stock. That’s ambitious, I know, but so is Joby Aviation. And if the flying taxi market takes off, Joby’s early-stage investors can enjoy the view from the top.
On the date of publication, David Moadel 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.
