With animal spirits returning to Wall Street, and greed replacing fear in the minds of investors, Joby Aviation (NASDAQ:JOBY) stock is hot again.
Shares bounced off a low of just over $5 in early November and were trading near $7 on December 15. “Tech whisperer” Cathie Wood grabbed shares while TV analyst Jim Cramer was screaming “no!” That was enough to send JOBY up almost $1.50 in a single day.
But there are a host of companies working toward running electric Vertical Take Off and Landing (eVTOL) craft in the friendly skies. What separates Joby from the pack? Is it better than Archer Aviation (NASDAQ:ACHR), Europe’s Lilium (NASDAQ:LILM), or China’s EHang (NASDAQ:EH)? I have written about all of them here at InvestorPlace.
Joby Advantages
Joby, based in Santa Cruz, California, recently got $325 million in incentives to build a factory near Dayton, Ohio. The company demonstrated its craft over New York City in November. It claims to be 84% done with its
. It says service will start in 2025.
Joby’s battery and power distribution systems are now approved. It delivered the first in a nine-vehicle, $131 million order to the Air Force. It has demonstrated complex maneuvers with four pilots.
Joby also has secure financing. Toyota Motor (NYSE:TM) has put $400 million into the company. This helped it win commitments to get VTOL “vertiports” built in Japan.
Intel (NASDAQ:INTC), Blackrock (NYSE:BLK) and Delta Airlines (NYSE:DAL) are all listed as investors. As a result, the company had $1.1 billion in cash on the books at the end of September.
Joby’s design is built around six tilting rotors, able to maneuver like a helicopter but fly like a plane with 5,300 pounds of payload. It uses 4 battery packs to distribute power among the electric rotors, batteries originally designed for cars.
Joby Disadvantages
Despite all this, Joby only gets a rating of 43 from InvestorsObserver. More than half of all stocks have a higher rating.
Joby uses a charging system of its own design, not the Combined Charging System (CCS) used by rivals like Archer. CCS lost the car charging battle to Tesla (NASDAQ:TSLA).
There are other weaknesses and challenges. All players may be only one bad accident from bankruptcy. Joby burned through $230 million in operating cash during the 9 months through September. It’s held aloft by stock sales, $280 million in private placements this year.
Then there’s the question of cost. Joby expects to charge $3 per mile to ride one of its air taxis. That assumes the planes fly 2,500 hours each year. That’s more than a regional jet.
The Bottom Line
There has long been a demand for something like an eVTOL. But demand may be more price sensitive than Joby thinks.
Blade Air Mobility (NASDAQ:BLDE) runs helicopters between Midtown Manhattan and major airports at $195 per seat. It plans a transition to eVTOLs, but with only a modest reduction of costs, from $500 to $430 per flight. It is nearing breakeven with $30 million in revenue.
If you’re concerned about the question of demand, watch Blade as you consider a position in Joby. Not everyone is going to get through the door of eVTOL success. Joby is well-positioned to deliver a supply of eVTOLs. But will the customers come at the price operators must charge?
That’s the next question.
As of this writing, Dana Blankenhorn had a LONG position in INTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.