Stocks to buy

3 Reasons to Buy and Hold JOBY Stock for the Long Term

The flying car or vertical aviation market is at the cusp of revolutionizing urban mobility, creating a lucrative multi-billion-dollar market. With enough investment, open-minded regulators, and consumer interest, this nascent market could become a force to be reckoned with, similar to how the electric vehicle (EV) market has grown in the past decade. Joby Aviation (NYSE:JOBY) is just one of these small group of companies working to create a scalable electric vertical take-off and landing (eVTOL) aircraft that could carry passengers and cargo over short distances. But its position in the market is why investors should consider buying JOBY stock.

While the stock is still only trading just above $5/share, below are 3 reasons to consider purchasing shares in JOBY stock now.

JOBY has overcome a number of regulatory hurdles

It’s imperative to understand eVTOLs or “flying cars” are still in novel technologies, and as they make their way to market, these vehicles will require significant regulatory approval. Joby has made significant strides in this aspect. In early February, the eVTOL company received certification from the Federal Aviation Administration (FAA) for its propulsion system, which the company says is a “critical step towards receiving type certification for [their] aircraft.”

Towards the end of February, Joby became the first eVTOL company to complete the third of five stages of the FAA type certification process. During this stage, the FAA tests the aircraft type for mechanical, structure, and electrical systems integrity.

The eVTOL seems well on the way to getting a full type certification, which could be huge for its share price.

Growth will be driven by 3 key urban markets

In preparation for its eVTOL aircraft, JOBY stock has been developing flying tax infrastructure in cities across the United States. In mid-January, Joby announced a partnership with eVTOL company Atlantic to electrify current aviation infrastructure in southern California and New York. This would eventually pave the way for Joby to kickstart the release of its long-awaited air taxi service.

Furthermore, Joby signed a contract Dubai’s Road and Transport Authority that would give the start-up exclusive rights to launch and run an air taxi service in the UAE’s flagship city for six years. The air taxi service should launch by 2026.

Joby Aviation has a sizable cash balance

In every stock analysis, it’s important to mention financial figures, especially regarding a start-up like JOBY stock. While Joby is definitely still pre-revenue, the various partnerships mentioned above give us a glimpse into the company’s long-term potential as a major player in the nascent space. The company’s advancement in its type certification process also sheds light on the opportunities there are to come.

Moreover, Joby Aviation may be pre-revenue and churning out losses annually, but the company does have a lot of cash on its balance sheet. As of their latest balance sheet dated December 31st, 2023, Joby’s cash balance sat at over $1 billion. In 2023, Joby lost just over $513 million. Assuming costs don’t move upward too drastically, the company has a couple years of runway, conservatively. The company could of course raise more equity in the future, bringing in more cash for research and product development.

On the date of publication, Tyrik Torres 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 Publishing Guidelines.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

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