JOBY –Tesla Meets Uber in the Sky

Joby Aviation, Inc. $Joby Aviation, Inc.(JOBY)$ is scheduled to report Q1 2022 earnings after market close on Thur May 12. The consensus EPS estimate is –$0.12 and the Revenue estimate is $0 mil.

Wait $0, meaning no revenue?

Yes, as the leader in the electric vertical take-off and landing aircraft (eVTOL) maker and operator is still in the pre-commercialisation stage of its development. It’s an intriguing story that might be worth few minutes of one’s time to read more, and one’s investment dollars.

JOBY and eVTOLs Commercial Story

JOBY raised $1.6 billion when it went public through a special purpose acquisition company (SPAC) listing at NYSE in Aug 2021. It was valued at $6.6 billion after merging with SPAC Reinvent Technology Partners (RTP). Its plan is to manufacture eVTOL and offer commercial ‘flying electric ridesharing’ service by 2024 (a little more than 1.5-year away).

JOBY has been extensively testing its S4 prototypes, developed since 2012, 5-seater including pilot all-electric-powered aircrafts with six sets of propellers, that can cover 240km in single charge, at cruising speed of 322km/h. In Mar 2022, it announced successful first round certification by US Federal Aviation Administration (FAA) on its eVTOL and working towards 2nd round and final validation.

JOBY S4 Prototype

It has been smart in choosing the right partners to stay ahead of the competition. These include NASA to develop its eVTOL engineering, safety and flight capabilities, Toyota which has also sunk in $400 million for manufacturing design and factories, JetBlue to tap operating commercial aviation expertise, and through acquiring Uber Elevate, gained the ride-hailing giant’s expertise in ridership load planning, route optimisation and analytics capabilities.

As a commercial service, JOBY aims to cut down commute time in congested cities from LA to NY, Paris to Moscow, Tokyo to Mumbai, Mexico City to Rio de Janeiro, beating traffic jams and reducing carbon emissions. In a decade, it projected presence in 20 cities worldwide, with 14K eVTOL in service, generating about $20 billion in revenue — electric air mobility that scaled around the world!

JOBY is likely to be the first mover in offering this service come 2024.

Morgan Stanley analysts forecasted that the total addressable market (TAM) for this Urban Air Mobility (UAM) sector is worth $3.66 billion in 2026, $12 billion in 2030, and would accelerate to an eye-popping $1.5 trillion by 2040. The technology and use cases of eVTOL would also extend beyond UAM to include commercial, cargo and military usage.

Global eVTOL market, technology and use cases. source: Technavio

Thus, it is not surprising to see many aviation start-ups, some partnering well known players across continents to compete for a piece of the revenue pie in the sky. These include another US maker, Archer Aviation $Archer Aviation Inc.(ACHR)$, UK’s Vertical Aerospace $Vertical Aerospace(EVTL)$, Germany’s Lilium $Lilium N.V.(LILM)$, and Japan’s SkyDrive. Risks to JOBY include competing for the same pie of investment dollars and early users, alongside possible technological challenges and ability to monetise the UAM services sufficiently.

JOBY Technical Story

From Daily Chart (below) as stock has only been trading since Aug 2021, there is little on longer term trend to analyse. We can see however, it has been on a declining trend since the high reached intraday during IPO of $14.33, and is now trading below all major moving averages (MA), which could be either signs of trouble or signs of opportunity to enter at better price. My thesis is on the later, as I believe in the commercialisation potential story above, and the steep drop in Jan is on the back of broader sell-off of currently non-profitable growth tech stocks, due to rates hikes worries, which will pass.

Daily Chart $Joby Aviation, Inc.(JOBY)$

Bullish Scenario

If JOBY provides optimistic forward guidance, price could rise to $5.16 (+27.88%), where there is also confluence of MA20 and MA50 that might limit further upside. Bullish momentum riding on significant progress in certification and towards manufacturing might see the share price soaring further to reach 200 MA at $7.33 (+70.82%). Just a note, percentage gain of double digits are common for single digit stock prices such as JOBY.

Bearish Scenario

If JOBY gives weaker than expected guidance and challenges that might delay its commercialisation, price could dip to its previous low of $3.61 (–13.22%) and likely overshoot before the ‘double bottom’ pattern then might play out, providing support and price rebound. If sentiment becomes very bearish, maybe with delays or roadblocks in its commercialisation plan, price would fall, using symmetry with upside to likely $3 (–27.88%).

I would stay grounded by aiming for a small (not more than 0.5% of my portfolio) long position in $Joby Aviation, Inc.(JOBY)$ post earnings, if the bullish scenario plays out. This would be speculative long term bet on the ‘flying tesla-uber vehicle’ with holdings of more than 2 years, until the company launches its aerial ridesharing service come 2024.