Joby Aviation: Why Buying the Dip Could Burn Investors

Joby Aviation, a leading electric air taxi (eVTOL) company, has seen its stock price fall nearly 50% from recent highs. The decline comes amid broader skepticism toward high-risk, unprofitable companies in the market.

Last month, Joby raised over $1 billion through convertible bonds and common stock offerings, selling shares at $11.35. This capital raise contributed to the stock's decline, with shares now trading around $10.50 as of February 8.

The company is burning through cash rapidly, reporting negative free cash flow of $532 million over the past 12 months. Despite having nearly $1 billion in cash, Joby continues to raise capital to fund its ambitious expansion plans.

Joby aims to build a manufacturing facility capable of producing four eVTOL vehicles per month by 2027, coinciding with hoped-for FAA certification approval for commercial operations.

The fundamental concern for Joby investors is the massive disconnect between its $10 billion market valuation and its minimal revenue potential. Even at full production capacity of 48 vehicles annually by 2027, the company might generate only around $100 million in revenue.

This revenue projection represents just 1% of Joby's current market capitalization, creating an enormous valuation gap that would require years of explosive growth to justify. The company faces a long path to profitability with years of heavy losses expected.

Shareholder dilution presents another major headwind. As Joby continues burning cash at a rapid pace, it will need to conduct additional capital raises, further diluting existing shareholders and putting downward pressure on the stock price.

The regulatory hurdle cannot be underestimated either. FAA certification for novel aircraft takes years, and any delays could push back Joby's timeline significantly while burning through more cash.