When a company is a pioneer in an emerging industry, it’s forgivable if that company’s financials aren’t perfect. So, investors will need to be patient and forgiving with air-taxi manufacturer Joby Aviation (NYSE:JOBY). Sure, Joby Aviation stock involves risk and volatility, but a small portfolio allocation could yield huge returns.
Joby Aviation operates on the forefront of the air-taxi industry. The company has agreements with the U.S. Air Force as well as three government departments of Abu Dhabi, United Arab Emirates.
Thus, if you’re going to wager on the future of air taxis, Joby Aviation is a very reasonable choice. With that in mind, let’s explore the latest developments, both operational and financial, with Joby Aviation.
Two Milestone Moments for Joby Aviation
First, let’s start off with some exciting news for Joby Aviation. The company recently broke ground on the expansion project for its manufacturing facility in Marina, Calif. This expansion is expected to “more than double” Joby Aviation’s “manufacturing footprint at the Marina Municipal Airport.”
Joby Aviation won’t have to fully fund this expansion project. That’s because it’s partially funded by a $9.8 million California Competes grant awarded to Joby Aviation.
Another piece of positive news is that Joby Aviation officially completed its pre-production flight-test program. For the company’s next phase, Joby Aviation will “use its production prototype aircraft to prepare for upcoming for-credit flight testing.”
The end goal, of course, is for Joby Aviation to achieve full certification from the Federal Aviation Administration. Don’t expect this to happen tomorrow or next week. Clearing regulatory hurdles in a burgeoning industry is a time-consuming endeavor, but Joby Aviation is demonstrating steady progress.
Can You Forgive Joby Aviation’s Financial Faults?
Before hitting the “buy” button with Joby Aviation stock, I strongly encourage you to read the company’s first-quarter shareholder letter. Don’t just look at the pretty pictures of the air taxis and Joby Aviation’s Marina production facility.
Scroll to the section that shows the details of Joby Aviation’s financials. Doing this will serve as a reminder that there are risks involved for Joby Aviation’s investors.
Being on the vanguard of a burgeoning industry often means that a company will have to spend money today to make money later. Such is the case, it seems, with Joby Aviation. The company’s operating expenses grew from $99.716 million in the year-earlier quarter to $145.922 million in 2024’s first quarter.
I will not insist that Joby Aviation needs to embark on a cost-cutting mission. Investors will just have to accept Joby Aviation’s need to spend money to achieve FAA flight certification and commercialize the company’s air taxis.
You should also know that Joby Aviation incurred a net earnings loss of 14 cents per share in Q1 of 2024. For what it’s worth, that’s better than the loss of 19 cents per share that Joby Aviation sustained in the year-earlier quarter.
These aren’t wonderful-sounding results, but that’s why I urge investors to be patient and consider their risk tolerance.
Joby Aviation Stock: Target $10 and Not a Penny Less
Previously, I set a share-price target of $10 for Joby Aviation. I’m sticking to that call, but there will be volatility along the way, including some thrills and spills.
If the skies are filled with air taxis someday, Joby Aviation will be an early mover in the industry. With that, Joby Aviation stock has the potential to reach $10 and probably much higher than that.
So, keep your eyes on the prize and on the skies. Think long and hard about your risk tolerance, consider buying a few Joby Aviation shares, and strap in for an unforgettable ride.
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.
