Joby Aviation (NYSE:JOBY) stock is up about 8% and trending on social media and financial news websites today. The catalyst for the gains and the attention was the firm’s announcement that it had reached a deal to launch an air taxi service in the United Arab Emirates (UAE). Joby is developing electric vertical take-off and landing (eVTOL) aircraft.
More About Joby’s Deal With the UAE
Joby signed a deal with Dubai, one of the UAE’s emirates and the country’s capital, to provide air taxi services by early 2026. The firm is looking to begin testing its air-taxi operations there next year.
Under the agreement, Joby will be the only provider of air-taxi services in Dubai “for six years,” The eVTOL maker added that it would obtain “a variety of support from (Dubai) including financial mechanisms.” However, the company did not provide details about the nature of the support it will receive from Dubai.
The Likely Reasons Why Investors Are Reacting So Positively to the Deal
Multiple well-regarded firms have entered the eVTOL sector, and investors are attempting to determine which companies will be winners and which will be losers, Elektrek noted. Additionally, investors are attempting to decide which firms will be first out of the gate when it comes to generating revenue, the website pointed out. Obviously, Joby’s deal with Dubai shows that it will generate significant revenue relatively soon and indicates that its eVTOLs can impress governments.
Moreover, the deal could conceivably lead to Joby becoming a leader in providing air taxi services to many neighboring countries. For example, Saudi Arabia, located next door to Dubai, shares cultural and political ties and has a much larger population. It also has the funds to help Joby launch air-taxi services in its capital city of Riyadh. Consequently, I wouldn’t be surprised to see the firm make a similar deal with Saudi Arabia as the one announced today.
Also importantly, a deal with Saudi Arabia would generate a lot of publicity for Joby and, as a result, could result in more such agreements with nations with whom the Saudis have close economic relations, such as China and India.
The Price Action of JOBY Stock
Heading into today, JOBY had climbed 9% in the last three months and 41% in the previous year.
JOBY stock is still down over half from its all-time peak of $15.12 in 2021.
On the date of publication, Larry Ramer did not hold (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.