Do a bit of research into the flying car stocks and the industry and you’ll quickly discover that massive growth is expected. Forecasts indicate compound annual growth rates will exceed 50% all the way out to the year 2040.
That level of growth is exciting and could lead investors to believe it’s a foolproof choice. I’m not implying that the industry will fail or that investing isn’t a wise choice. Instead, I advocate that investors should temper their expectations with recent financial statements above all else.
The figures contained therein give investors the most accurate picture of flying car stocks overall. Commercialization is the most important goal at this point. Profitability and other efficiency measures are things to worry about later. Let’s look at the earnings report from the biggest three flying car stocks and try to get a better idea of their businesses.
Archer Aviation (ACHR)
Archer Aviation (NYSE:ACHR) released first quarter earnings on May 9. Most of the news focused on the company’s progress toward commercialization. Again, that’s the most important thing for all flying car companies at this point. They must get their vehicles approved by the FAA before all else. After that, investors will be able to judge those companies and the sector by its financial performance.
What do we know about Archer Aviation stock at this point? Well, for one, there are clearly no revenues as commercialization has not yet occurred. As it stands now, it is expected that the company might produce $3 million in revenues in 2024. That could rise above $58 million in 2025.
What might that look like from a profit and loss perspective? The company incurred $142.2 million in operating expenses in the first quarter. That led to a net loss of $116.5 million. It’s likely that the company is going to lose money for some time after commercialization. That’s what the most recent earnings should tell any investor. The question of what that means for share prices is something different entirely. Interest rates will be lower by that time, barring an absolute catastrophe. Thus, stocks like Archer Aviation may be trading much higher.
Joby Aviation (JOBY)
Joby Aviation (NYSE:JOBY) Is the most developed of the U.S.-based flying car companies. That’s probably the biggest pro for the stock overall. Joby Aviation is the first and only electric air taxi company to have its airworthiness criteria published by the FAA.
The company also continues to develop its relationship with the United Arab Emirates. It’s very likely that the company will dominate that geography in coming years. The company is also strongly connected to the Department of Defense and will deliver multiple vehicles to the military in 2025.
From a fundamental perspective we honestly don’t know that much about what Joby Aviation’s future looks like. The company posted a net loss of $95 million during the first quarter. It also had $924 million in liquidity to end the quarter. Simple arithmetic dictates that the company can continue operations for several more years at this pace. However, that assumes that the company does not commercialize which will not be the case.
In short, I think the earnings from both Joby Aviation and Archer Aviation tell investors the same thing: each company continues to progress toward commercialization and remains well=funded. There’s no reason to bet against either at this point.
EHang Holdings (EH)
EHang Holdings (NASDAQ:EH) and its stock are fundamentally different from those of Joby Aviation and Archer Aviation. For one, EHang Holdings is a Chinese company whereas Joby Aviation and Archer Aviation are both U.S. firms. More importantly, EHang Holdings is already operating commercially. That means the firm is out of the pre-revenue stages which allows us to analyze it more closely.
The company reported $8 million in sales during the fourth quarter and $16.5 million in sales during the entirety of 2023. That led to losses of $10.2 million and $42.6 million during those respective periods.
There’s a lot that we can glean from those financials. I think the most important thing is that EHang Holdings is not that far from profitability. If the company can double its revenues again it will likely be close to, if not profitable overall. It is by far the safest of the big three flying car stocks at this point.
On the date of publication, Alex Sirois 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.
