Key Points
- Vertical Aerospace is a promising company whose capital is insufficient, and others are in a better position.
- Archer Aviation cruised through Phase 1 certification and is on track for operations in 2025.
- Joby Aviation has a first-mover advantage and is nearing completion of Phase 3 certification.
- 5 stocks we like better than Joby Aviation
EVTOL, electric vertical take-off and landing craft, a page right out of science fiction, are about to take the world by storm. These vehicles combine the carbon-reducing technology of electrification with vertical take-off and landing to produce highly adaptable craft perfect for a variety of use cases.
Among the first to be tackled are short-hop flights connecting the world’s leading airports with their respective metropolitan destinations, an industry worth billions globally. EVTOLs will not only decrease the time from urban centers to airports but also reduce traffic on the road, shortening drive times for other commuters.
The NYC taxi industry was estimated at $4.54 million per day in 2019, and Laguardia alone serves more than 30 million passengers annually. Hence, there is a significant addressable market with even only a single city served. This is a look at three leading EVTOL companies and which of them might be able to take flight in 2024.
Vertical Aerospace share price under pressure, no upside in 2024
Vertical Aerospace NYSE: EVTL is a promising EVTOL manufacturer with prominent partnerships and hundreds of hours of test flights to its credit. However, the share price is in a downtrend and may not be able to recover significantly in 2024. Among the numerous issues for shareholders is the company’s announced certification delay. Vertical Aerospace is targeting 2026 for final certification, putting it in last place compared to leaders Joby Aviation and Archer Aviation.
Other problems that exist for Vertical Aerospace is capitalization. The company did not have enough cash at the last report to survive until 2026. This brings in the specter of dilution and the company’s mixed-shelf filing. Vertical Aerospace filed to offer a variety of assets up to $180 million to raise cash. Assets include common stock, preferred shares, warrants, and units combining one or more other types. The issue here isn’t much the need for cash as the amount. The $180 million would more than halve existing shareholder value if used in full.
Archer Aviation is on track for operations in 2025
Archer Aviation NYSE: ACHR is one of two EVTOL companies on track to begin commercial operations in 2025. Among the latest news is word the company’s flagship vehicle, the Midnight EVTOL, cruised through its Phase 1 testing with ease. The news sets the company up to complete Phase 2 testing soon and move on to piloted testing of commercial readiness later this year. Other news includes deals/partnerships to build infrastructure in key US markets like NYC and Los Angeles and globally. Archer also announced the first presales of its vehicles.
Analysts like the cut of Archer’s wings. The group rates the stock at Moderate Buy and has been lifting its price targets for the last year. The most telling detail is that the lowest price target on record at Marketbeat is 50% above the current action, and the consensus is another 3000 bps. Regarding revenue and earnings, revenue is expected to ramp up 2500% this year to next, to about $7 million, as government contracts fuel early business.
Joby Aviation is on track with a first-mover advantage
Joby Aviation NYSE: JOBY is the farthest along in the certification process, nearing the end of Phase 3. More importantly, its government/military contracts, which do not rely on FAA certification, are already producing revenue. The company is expected to post its first revenue in FQ4, set to be announced soon, and revenue is forecasted to ramp as the year progresses. The total value of the government contracts exceeds $160 million.
Other news lifting Joby's stock price is an exclusive deal with Dubai. The company will commence operations there in 2025 and has a six-year contract to protect its business. The deal may lead to others in the region. The analysts' consensus expects revenue to top $1 million in F2023 and to grow 1800% to $22 million in fiscal 2024. Analysts rate this stock at Hold and see it advancing by 20% at the consensus midpoint.
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