As the Joby Aviation stock price implodes, is it a bargain?

By:
on Jun 14, 2024
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  • Joby Aviation’s share price has crashed hard in the past few years.
  • The company has made a lot of progress and has a solid balance sheet.
  • The main concern is whether there is enough market for eVTOLs.

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Joby Aviation (NYSE: JOBY) stock price has collapsed hard this year. Like other eVTOL companies like Lilium and Archer Aviation, it has crashed by over 25% in 2024 and by 35% in the past 12 months. It has plunged by over 57% from its highest level in 2023, giving it a market cap of over $3.8 billion.

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Market size concerns

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Joby Aviation, one of the biggest eVTOL companies in the industry, has made a lot of progress as it matches towards certification. It has become the first electric taxi company to have its final airworthiness published by the FAA. 

The company has also carried out intensive tests for its planes and is now building its second production prototype. It has also made a lot of commercial progress such as its partnership with the US Air Force and the Abu Dhabi government.

Most importantly, unlike other eVTOL companies, it has a strong balance sheet with almost $1 billion in cash. These funds are enough to last it for a few years as it works to start to ramp up production.

The biggest challenge for Joby Aviation is that it operates in a new market that has yet to be tested. And most of the reports about the eVTOL market size and the total addressable market (TAM) is based on uncertain numbers. Joby Aviation estimates that it is tackling a $500 billion market in the US. 

Joby hopes to reduce the cost of urban transport in the biggest cities. Users will be charged about $95 per a 25 mile trip, which is the same as what they pay in taxis. This amount will be significantly cheaper than what helicopter costs today. But the cost could be higher depending on the eventual landing costs in key cities.

While the market size is uncertain, what is clear is that the urban air mobility (UAM) market is a big one as the number of vehicle owners rise. As such, using these products will be faster, safer, and cost friendly. 

What is also clear is that Joby Aviation is not about to become a profitable company. It made a net loss of over $145 million in the last quarter, a big increase from the $99 million it lost in the same quarter in 2023. 

Therefore, while the company has a strong balance sheet, there is a likelihood that it will need to raise cash as it prepares to ramp up production.

Joby Aviation stock price analysis

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Joby Aviation stock

JOBY chart by TradingView

The daily chart reveals that the JOBY share price has collapsed hard in the past few months. It has dived from last year’s high of $11.97 to the current $5. As a result, the stock has remained below the 50-day and 100-day Exponential Moving Averages (EMA).

Joby Aviation has also formed a symmetrical triangle pattern, which is nearing a confluence level. This pattern also has a close resemblance to a falling wedge, a popular bullish sign. 

The MACD indicator has remained below the neutral point. Therefore, the stock’s outlook is neutral and could have a bearish or a bullish breakout. The key support and resistance levels to watch will be $4.50 and $6, respectively.

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