Blade Air Mobility: Focus On Big Picture

seekingalpha03-20

Blade Air Mobility, Inc. stock trades near all-time lows despite aggressive business expansion the last couple of years.The market was disappointed by guidance for revenues, but the real market ...

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Kinwun As with a lot of former SPACs, Blade Air Mobility, Inc. (NASDAQ:BLDE) has aggressively expanded the business over the last couple of years, yet the stock still trades near the all-time lows. The air mobility platform disappointed investors with guidance despite the stock not really trading based on expectations for growth anyway. My investment thesis remains ultra Bullish on BLDE stock, with the real market opportunity not playing out until modern electric aircraft, or EVAs, start replacing helicopters.   Source: Finviz Focus On Flight Profits Blade Air Mobility has a unique business operation, with most costs passed through with some fluctuations. The company reported strong growth in 2023, but the market appears concerned with the guidance for revenues and EBITDA profits over the next 2 years. The company reported Q4 '23 revenues grew 24.5% to $47.5 million. The flight margin expanded to 19.0% in the seasonally slow quarter, up from only 14.3% last Q4.   Source: Blade Air Mobility Q4'23 presentation Blade Air Mobility has grown substantially the last couple of years due to expanding existing operations after acquisitions, especially in the medical market, and the reopening of business after Covid shutdowns. The short distance market appears to have limited growth opportunities due to the current reliance on helicopters and the restricted flight operations for now. The company guided to the following 2024 and 2025 financial targets:   Source: Blade Air Mobility Q4'23 earnings release The stock fell on this guidance for sales below consensus estimates, but a big part of the issue here is Blade not previously providing guidance. The company guiding to revenues of $240 to $250 million appears conservative compared to the consensus estimates up fat $257 million. On the other front, Blade Air Mobility is now forecasting 2025 adjusted EBITDA of $10+ million. The company has vastly improved financials. A couple of numbers hitting guidance is that Blade cut the BladeOne operations between New York and South Florida, causing a $1.7 million hit to Q4 revenues and a larger hit to annual revenues. Also, the plans to acquire 8 aircraft for the Medical organ transplant business will hit revenues while boosting profits via a reduction in operating costs, partly passed on to medical customers. Blade Air Mobility guided to 2025 revenues growing at a double-digit percentage growth rate highlighting an expectation for higher growth once trumping these one-time impacts in 2024. The other key is that new EVA aircraft will help expand the market opportunity as 2024 progresses and the business enters into 2025. Understated Future Now that Blade Air Mobility has an established UAM, the future is all about better aircraft to expand the service. The company hasn't recently detailed this opportunity, though partners like Beta expect to have EVAs ready for delivery in 2024 with a general assumption the initial aircraft will be used to expand services at existing locations, including Blade Airport in NYC.   Source: Blade Air Mobility Q4'23 presentation As with other air taxi operators, the forecast is for the these new aircraft to cost less to operate along with the ability to expand operations due to the safety aspects and especially the lower noise allowing for flight expansion to new landing zones. Blade Air Mobility estimates an EVA still cost $430 to operate per flight versus $500 for a helicopter.   Source: Blade Air Mobility Q4'23 presentation The company would see a massive $70 reduction in costs per flight, suddenly reducing the flight cost to only 2 passengers on the Blade Airport route. Blade Air Mobility already produced a $42 million flight profit in 2023 with upside ahead, even before the launch of new aircraft. Management did suggest the new aircraft will initially expand services alongside helicopters providing multiple aircraft options to passengers. Blade Air Mobility will have this unique opportunity to better cater to customers. The stock only has a market cap of $200 million now with a revenue estimate for 2024 of $250 million. Blade Air Mobility even has a $166 million cash balance, while the company forecasts being adjusted EBITDA positive in 2024 suggesting a $17 million adjusted EBITDA boost from last year. The company would have similar profit growth in 2025 to reach a $10+ million adjusted EBITDA target. Generally, the company could've done a better job expanding on the air taxi concept with the launch of eVTOLs when providing guidance through 2025. Joby Aviation (JOBY) is talking about launching services in 2025, and Blade Air Mobility spent the first earnings call in 2024 discussing the benefits of already having infrastructure as follows: It gives us a competitive moat because at the end of the day, if you want to do this, be in this business, whether it be with helicopters or EVA or what you may call eVTOL, you have to have a place to process passengers, get them set and move those aircraft very, very quickly in two to five minute turns. You can't do it on the sidewalk. So, we do believe that captive infrastructure is critical to our strategy. The biggest issue is the lack of discussion of tying the sales targets over 2024/25 with the large opportunity ahead. Companies like Joby Aviation and Archer Aviation (ACHR) aren't building eVTOLs with plans for launching air taxi services for growth amounting to only $25 million in annual revenue. Blade already has a Short Distance business with $71 million in annual revenues with limited market penetration due to the limitation of helicopters. Takeaway The key investor takeaway is that Blade Air Mobility is too cheap here trading with a market cap of only $200 million, just above the cash balance. The company has a business poised to capture a massive opportunity in air taxi services about to be opened up by new aircraft.  The stock market over reacted to conservative guidance and investors should use this dip to load up on Blade Air Mobility.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2420203379"}