Key points
- Vertical Aerospace is a promising company whose capital is insufficient and others are in a better position.
- Archer Aviation has passed Phase 1 certification and is on track for operations in 2025.
- Joby Aviation has first-mover advantage and is nearing completion of Phase 3 certification.
- 5 stocks we like most about Joby Aviation
The EVTOL, an electric vertical take-off and landing vehicle, a page straight out of science fiction, is about to conquer the world. 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 addressed are short hop flights connecting the world’s major airports with their respective metropolitan destinations, a sector worth billions globally. EVTOLs will not only reduce the time from city centers to airports, but will also reduce traffic on the road, shortening driving times for other commuters.
New York’s taxi industry was valued at $4.54 million per day in 2019, and Laguardia alone serves more than 30 million passengers annually. There is therefore a significant addressable market even with just one city served. This is a look at the three major EVTOL companies and which of them might be able to take flight in 2024.
Vertical Aerospace share price under pressure, no rise in 2024
Vertical aerospace NYSE: MAYBE is a promising EVTOL manufacturer with major partnerships and hundreds of hours of test flights under its belt. However, the stock price is in a downward trend and may fail to recover significantly in 2024. Among the numerous issues for shareholders is the announced delay in the company’s certification. Vertical Aerospace is aiming for 2026 for final certification, placing itself in last place compared to leaders Joby Aviation and Archer Aviation.
Another issue that exists for vertical aerospace is capitalization. According to the latest report, the company did not have enough liquidity to survive until 2026. This raises the specter of dilution and mixed-shelfing of the company. Vertical Aerospace has filed to offer a variety of assets of up to $180 million to raise liquidity. Assets include common stock, preferred stock, warrants, and units combining one or more other types. The issue here is not so much the need for cash as the amount. If used in full, the $180 million would halve the value of existing shareholders.
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 news that the company’s flagship vehicle, the Midnight EVTOL, easily passed Phase 1 testing. The news prepares the company to complete Phase 2 testing soon and move into commercial availability pilot testing later this year. Other news includes agreements/partnerships to build infrastructure in major US markets such as New York and Los Angeles and globally. Archer also announced the first pre-sales of its vehicles.
Analysts like the clipping of Archer’s wings. The group rates the stock at Moderate Buy and has raised its price targets over the past year. The most significant detail is that the lowest price target ever recorded on Marketbeat is 50% higher than the current stock, and the consensus is another 3000 bps. As for revenue and earnings, revenue is expected to rise 2,500% this year and 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 it is the company furthest 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 report first revenues in the fourth quarter, which will be announced soon, and revenues are expected to increase as the year progresses. The total value of government contracts exceeds $160 million.
Another piece of news that has boosted Joby’s share price is an exclusive deal with Dubai. The company will begin operating there in 2025 and has a six-year contract to protect its business. The deal could bring more to the region. Analyst consensus expects revenues to exceed $1 million in fiscal 2023 and grow 1800% to $22 million in fiscal 2024. Analysts rate this stock at Hold and see it advancing 20% to midpoint of consensus.
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