FAA Certification And Dubai Launch Will Drive Long-Term Electric Air Taxi Leadership

Catalysts

About Joby Aviation

Joby Aviation is developing and scaling electric vertical takeoff and landing aircraft for commercial passenger and defense applications worldwide.

What are the underlying business or industry changes driving this perspective?

• Approaching FAA Type Certification with five TIA aircraft in production and power-on testing underway positions Joby to be among the first to commercialize eVTOL services at scale. This can unlock high margin recurring service revenue and accelerate the path to positive earnings.
• Participation in the U.S. government eIPP program and early commercial operations in Dubai ahead of full FAA certification can pull demand forward. This can create earlier flight hours, route density and pricing power that support top line growth and faster operating leverage.
• Partnerships with Toyota, L3Harris, Uber and Blade, combined with expanding manufacturing in California and Ohio, enable production scale and dual use platforms that can support both commercial and defense volumes. This can improve unit economics, gross margins and long term free cash flow.
• Rapid advances in autonomy via Superpilot, long distance autonomous demonstrations and the NVIDIA IGX Thor collaboration create a path to pilot light or fully autonomous operations. This can reduce per flight labor costs and expand addressable markets, which may lift net margins over time.
• Early mover advantage in global air taxi networks, including high frequency Blade routes in New York and Europe plus regulatory support in markets such as Dubai and Japan, allows Joby to target premium urban and airport demand first. This can support higher revenue per available seat mile and potential long term earnings growth.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on Joby Aviation compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Joby Aviation's revenue will grow by 124.6% annually over the next 3 years.
• The bullish analysts are not forecasting that Joby Aviation will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Joby Aviation's profit margin will increase from -1232.6% to the average US Airlines industry of 5.8% in 3 years.
• If Joby Aviation's profit margin were to converge on the industry average, you could expect earnings to reach $51.0 million (and earnings per share of $0.04) by about July 2029, up from -$957.4 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 537.0x on those 2029 earnings, up from -8.2x today. This future PE is greater than the current PE for the US Airlines industry at 11.4x.
• The bullish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.08%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The pace and outcome of FAA Type Certification and the eIPP program remain uncertain, and any delays, additional requirements or prolonged government shutdowns could push back commercial launch in the U.S. and internationally, reducing the timing and scale of expected revenue growth and delaying the path to positive earnings.
• Joby is investing heavily ahead of demand in manufacturing capacity, global operations and autonomous systems while currently generating modest revenue and significant quarterly net losses. If ramp up in Dubai, Blade routes and early adopter markets is slower than expected, fixed costs may remain underutilized, depressing net margins and extending the period of negative earnings.
• The long-term thesis depends on rapid adoption of eVTOL air taxi services and defense variants. However, secular shifts in travel behavior, community acceptance of low altitude flight, regulatory constraints on urban vertiport build out or weaker than anticipated commuter uptake could limit route density and pricing power, constraining revenue and operating leverage.
• Execution risk in scaling complex aerospace manufacturing with new technologies such as hydrogen propulsion, hybrid turbine electric systems and advanced autonomy, combined with reliance on partners like Toyota, L3Harris, NVIDIA and multiple regulators, increases the chance of technical setbacks, cost overruns or certification hurdles that could inflate operating expenses, pressure gross margins and weigh on long-term free cash flow and earnings.
• Joby’s strategy requires continuous capital to fund large operating losses, high R&D spend and capex. Although the balance sheet is currently strong, a deterioration in equity market conditions, higher dilution from future capital raises or rising interest rates could increase the cost of capital and reduce shareholder returns even if revenue grows as expected.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Joby Aviation is $18.0, which represents up to two standard deviations above the consensus price target of $11.12. This valuation is based on what can be assumed as the expectations of Joby Aviation's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $18.0, and the most bearish reporting a price target of just $6.0.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $880.4 million, earnings will come to $51.0 million, and it would be trading on a PE ratio of 537.0x, assuming you use a discount rate of 8.1%.
• Given the current share price of $7.99, the analyst price target of $18.0 is 55.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.