Joby Aviation’s (NYSE:JOBY) flying taxis have achieved FAA certification for testing, and the company is now targeting commercial flights by 2025. As a top electric vertical takeoff and landing (eVTOL) aircraft maker, JOBY stock has seen its share of volatility this year. However, most of the stock’s momentum has been up and to the right, which is great news for growth investors betting on a stock that’s still relatively cheap compared to its potential.
Joby’s potential stems from several recent developments worth diving into. The company successfully flew in New York and received grants from California and Dayton, Ohio. This indicates growing interest from both the private and public sectors. Governments foresee economic benefits, competing for Joby’s production sites, reminiscent of Tesla’s (NASDAQ:TSLA) gigafactories race. Indeed, if this is the next big thing, investors will want to get in early, as they did with Tesla. That’s at least a good chunk of the thesis about why this stock has recently surged.
That said, the question is whether the momentum can continue into 2024. Let’s dive into why this stock could be a big winner next year and potentially in the years to come.
Progressive Financial Standing
At the time of writing, Joby Aviation held $4.5 billion in market capitalization, ranking in the 80th percentile in the aerospace and defense industry. With negative earnings over the last 12 months, it lacks meaningful valuation ratios to base an investment decision. Accordingly, this is a stock that investors aren’t buying for its cash flow, dividend, or earnings right now. Rather, investors look further to the company’s longer-term growth prospects and those future fundamentals.
The company’s success will likely be driven by continued execution of its ongoing growth strategies. In this regard, I think Joby is a stock worth considering.
Such a view is furthered by the American Association of Individual Investors’ outlook for the Aerospace and defense industry over the next 12 months. Expected growth in U.S. defense spending may boost earnings for defense businesses, but ongoing challenges in commercial aerospace could offset gains. Thus, it’s a question of which segments Joby targets and how the company positions itself for growth over time.
President Biden proposed a 2% defense budget increase in April 2021; in July, the Senate Armed Services Committee voted for a 5% increase in the FY 22 defense budget. Approximately 35% of A&D revenues come from commercial aerospace, which faces challenges due to lingering low demand post-pandemic.
Joby and ANA Holdings and Nomura Real Estate Partnership
Joby Aviation, ANA Holdings, and Nomura Real Estate (NRE) recently announced a collaboration to develop urban air taxi services in Japan, starting with metropolitan areas like Tokyo. Joby will be a technical advisor for the Tokyo Bay eSG Project, showcasing multi-modal mobility solutions, including a floating landing port. The partnership expands gradually to include various urban areas across greater Japan.
Joby and ANA HD initially joined forces in 2022, and NRE, a prominent real estate developer, joined to support the development of air taxi services. The partners work with local stakeholders to promote technology benefits and community acceptance. Joby and ANA HD are members of Japan’s Public-Private Conference for the Future Air Mobility Revolution, contributing to accelerating the adoption of aerial ridesharing.
In 2022, Joby sought FAA-type certification, subsequently applying for validation from the Japan Civil Aviation Bureau. Collaborating with JCAB officials, Joby aimed to pave the way for its air taxi’s commercial launch in Japan. The electric air taxi accommodates a pilot and four passengers, achieving speeds of 200 mph while minimizing noise and emissions.
Buy JOBY Stock Now
Joby Aviation posted strong quarterly results, propelling its stock 24% higher, along with gains for other companies in the flying car sector. Joby achieved breakthroughs in certification and delivered the first electric air taxi to the U.S. Air Force, indicating industry progress.
While investing in JOBY is speculative, it’s worth considering a small position. I believe this company could certainly provide big gains alongside some significant volatility. Of course, any financial crisis or economic calamity would not bode well for its stock, so I’d tread carefully for now. But for those with a higher-risk portion of the portfolio one is looking to dollar cost average into, this is a stock I’d put on that list right now.
On the date of publication, Chris MacDonald 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.
