Joby Aviation Goes Airborne as News Flow Accelerates

Grounded for most of its public market history, Joby Aviation, Inc. NYSE: JOBY is taking off — again.

Shares of the electric passenger aircraft maker rose 62% last week after the company received permission to fly its all-electric, vertical take-off and landing (eVTOL) ‘air taxi.’ The Federal Aviation Administration (FAA) granted a Special Airworthiness Certificate clearing the runway for flight testing of the first Joby aircraft to roll off the production line.

The development could mark a major milestone for the future of public transportation. Although Joby has flown aircraft since 2017, the FAA approval will allow it to add pivotal test mileage to its eVTOL platform in hopes of someday supporting daily commutes through the sky. The first Joby aircraft is slated for delivery to Edwards Air Force Base next year as part of a $131 million contract with the U.S. Air Force. 

When the Governor of California visits your company to celebrate the news, you know it's a Ron Burgundy-type big deal. Gavin Newsom’s appearance at Joby’s Santa Cruz headquarters highlighted the global push toward cutting carbon emissions across all transportation modes. The campaign extends well outside the state’s borders.

Joby is developing the eVTOL aircraft with Japanese automaker Toyota which has played a key role in design, production and assembly. The company held a separate commemorative event with Toyota, its largest external shareholder having invested approximately $400 million since 2020. In April 2023, the companies reached a long-term supply agreement for powertrain and actuation components. 

Joby is aiming to launch a commercial passenger operation in 2025 and already has one major airline on board. In October 2022, the company partnered with Delta Air Lines on a plan to bring emissions-free experiences to travelers heading to and from Delta airports. 

What Else Did Joby Aviation Announce?

In a well-timed move on the same day, Joby appointed Toyota’s President and CEO of North America Ted Ogawa to its Board of Directors. The move not only stands to strengthen the Toyota relationship but also adds another valuable person to a boardroom that is as eclectic as it is electric. 

Joby’s Chairman of the Board is Pinterest co-founder Paul Sciarra. After being granted additional restricted stock units (RSUs) last month, Mr. Sciarra owns nearly 70,000 shares of Joby — which has ballooned to be worth roughly $7 million. Led by a massive stake held by CEO JoeBen Bevirt, who also sits on the board, Joby’s insider ownership is a strong 15%. Investors often consider significant insider ownership to be a valuable stock attribute because it shows that management has ‘skin in the game.’ 

Earlier this year, Joby added former FAA administrator and Delta board member Michael Huerta to its board. Mr Huerta undoubtedly played a vital role in steering the company through the FAA permit process. The board also includes LinkedIn co-founder Reid Hoffman, Google executive Halimah DeLaine Prado and former Southwest Airlines CFO Laura Wright.

Striking while the iron’s hot, on Thursday Joby announced that South Korean wireless carrier SK Telecom invested $100 million in the company. The investment is tied to SK Telecom’s “K-UAM Grand Challenge,” which is a government-led initiative around infrastructure innovation. Expanding on a partnership formed last year, the deal could lead to the adoption of urban ride sharing in Korea.

How Did Wall Street Respond to the Joby Aviation News?

Wall Street has been slow to respond to Joby’s breakout developments. Although we could get more insight this week, analysts have typically chimed in after quarterly earnings updates. Given the intense news flow since the first quarter report, much catch-up will be necessary after the second quarter update in early August. 

Two firms did, however, refresh their opinions last week. Perhaps waiting to see if the positive news turns into more robust financial statements, Raymond James stuck with its Hold rating. Canaccord Genuity, on the other hand, reiterated its Buy rating and Street-high $11 target. But since this represents less than $1.00 upside from Friday’s close, chasing here may be unwise.

Instead, investors that want exposure to air mobility and environmentally-friendly goals all-in-one may want to wait for a pullback. But as we learned last week, when Joby returns to land, the next take off could happen at any moment.