Shares of Joby Aviation JOBY, which is developing flying taxis, have performed well on the bourses. Shares of this California-based company have gained 49.7% in a year, handily outperforming its industry’s 33.6% growth in the same timeframe. Another eVTOL-focused stock Archer Aviation ACHR has performed even better, surging 81.6%.
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Given JOBY’s highly impressive rally, investors might wonder if the opportunity to add this high-flying transportation stock to their portfolio has passed. However, we believe JOBY has a lot going in its favor, and this rally is far from over. The stock holds substantial upside potential as we step into 2025.
Technical indicators suggest continued strong performance for JOBY, a leading player in the electric vertical takeoff and landing (eVTOL) space. The stock trades above its 14-day and 50-day moving average, signaling robust upward momentum and price stability. This technical strength underscores positive market sentiment and confidence in JOBY’s prospects.
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Flying Taxis May Revolutionize Urban Travel: Given its focus on urban air mobility, JOBY’s offerings are likely to include advanced booking systems, partnerships with ride-sharing platforms and dedicated service routes. Joby Aviation plans to develop facilities capable of producing up to 500 eVTOL aircraft annually in Dayton. This strategic move underscores Joby Aviation’s commitment to scaling up its production capacity and meeting the demand for electric air taxis. It also demonstrates the company’s tangible progress toward commercializing its electric air taxis.
With cities becoming more and more congested, the demand for more efficient and eco-friendly transportation solutions is on the rise. Even though similar to helicopters, eVTOLs score better as they are emission-free and quieter owing to their electric motors. Further, they possess the ability to navigate remote or difficult-to-access areas. This increases their value for search and rescue missions. The eVTOL market is reportedly projected to grow from $1.76 billion in 2024 to $24.1 billion by 2031, at a CAGR of 51.6% between 2023 and 2031.
Likely Restriction on Chinese Drones: Recently, reports have emerged that the U.S. administration is considering a ban on drones that utilize Chinese technology. In the event of this becoming a reality, Joby Aviation is likely to receive a huge boost as it will then reduce competition in the flying electric vehicle market. Less competition from Chinese manufacturers is likely to ease the pricing pressures for JOBY, which aims to achieve product commercialization in the current year.
Partnership With Big Players: JOBY, which recently received a Part 141 certificate from the Federal Aviation Administration for its flight academy, thus allowing it to build out a team of qualified pilots before commercial operations officially commence, has partnerships with commercial as well as government entities for its air taxi services. JOBY’s partnerships with the Department of Defense, Toyota TM and UberTechnologies UBER bode well. In October, Japan’s auto giant Toyota announced its decision to invest a further $500 million in Joby. The $500 million commitment will be delivered in two tranches. It will bring Toyota’s total investment in Joby to $894 million, further cementing their partnership. This capital injection aims to expedite JOBY’s certification process and commercial production.
Ambitions to Operate Air Taxis in 2025 on Track: Earlier in the month, Joby announced that it has completed static load testing on an FAA-conforming tail structure of the aircraft. Joby is the first eVTOL manufacturer to complete three of five stages of the FAA-type certification program. Work on the fourth stage is underway. Completion of the static load testing is a positive step toward the fulfillment of the company’s ambitions to operate air taxis before 2025 ends.
Owing to the bullishness, earnings estimate revisions for 2025 have been favorable. Also, the Zacks Consensus Estimate for 2025 earnings per share suggests 3.2% growth from 2024 expectations.
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From a valuation perspective, Joby Aviation is trading at a premium compared to the industry average. In terms of price-to-book value, JOBY is trading at 9.3X, higher than its three-year median of 3.48X and the industry’s 4.84X.
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A premium valuation generally indicates that the market has strong confidence in the company’s prospects.
The positive developments surrounding JOBY, as highlighted in the writeup, have led to the stock’s premium valuation, as investors have high expectations from the company. Consequently, they are willing to pay a premium for the stock, believing it will outperform both its peers and the broader market in the coming months.
JOBY’s electric air taxi offers a promising solution for urban air mobility, addressing the growing demand for sustainable transportation alternatives. With its ability to carry a pilot and four passengers at speeds of up to 200 mph, the eVTOL aircraft presents a compelling value proposition for commuters seeking efficient, environment-friendly travel options.
Owing to these positives, we advise buying this Zacks Rank #2 (Buy) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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