Top flying car stocks such as Joby Aviation and Archer Aviation have tumbled this year, wiping out billions of dollars in market value. Joby Aviation shares have fallen 48% year to date and 60% over the past 12 months, while Archer Aviation has declined 37% and 57%, respectively, despite both companies moving closer to commercial operations.
Archer and Joby Aviation stocks have fallen ahead of their commercialization stage
Electric vertical takeoff and landing (eVTOL) companies have been in the spotlight in the past few years as they seek to disrupt the transportation industry.
Their goal is to build small electric aircrafts that can travel by between 241 km/h and 322 km/hr carrying about 4 passengers. Archer’s Midnight will have a 160 km range, while Joby Aviation’s S4 has a 241 km range.
Archer and Joby have worked hard in the past few years to develop, test, and receive federal authorization for their flights. In this time, they have raised billions of dollars by selling shares and by receiving investments from external funders.
Toyota has become Joby’s biggest shareholder with 128 million shares. It also counts companies like Intel and Delta Air Lines as investors. Archer has received huge investments from Stellantis, the parent company of Jeep and Fiat.
The companies have also made a lot of progress in inking deals ahead of their launches. Joby Aviation finalized an electric air taxi deal with Virgin Atlantic this week. It also has similar deals with Delta Air Lines, Uber, Saudi Arabia, and Dubai.
Archer has deals with United Airlines, which will buy up to 200 aircrafts, Ethiopian Airlines, and Southwest.
Analysts estimates that the eVTOL industry has more room to grow in the near term. A study by Markets and Markets estimates that it will have a compounded annual growth rate (CAGR) of 12.3% between 2025 and 2035. Its market size will hit $5 billion then.
Joby and Archer are now gearing towards their commercialization stage, which will happen later this year or early 2026.
Why JOBY and ACHR stocks have fallen
In theory, JOBY and ACHR stocks should be having a great year as they transition from cash spending to revenue generation. Their stocks have, however, plunged this year amid numerous concerns, which explains why their short short interest have soared. Joby has a short interest of 10%, while Archer has 14.28%.
There are several concerns among investors. First, the two companies have always been dilutive, a trend that will continue even when the commercialization process starts. Archer’s outstanding shares have jumped from 110 million in 2021 to over 623 million today. Joby’s outstanding shares have risen from 300 million in 2021 to over 560 million today.
The two companies have adequate cash in their balance sheets, with Joby and Archer having $2.4 billion and $1.8 billion in cash. Still, as we have seen with many startups, profitability will take time, which will see them raise more cash in equity and debt over time.
The next key catalyst for these stocks will be in early August when they release their financial results. Joby will release on August 5, while Archer releases two days after that.
Analysts are largely positive about Joby and Archer, with their targets being higher than where they are today. Cannacord Genuity has a target of $11.50, while Morgan Stanley sees Joby rising to $13. Needham and Oppenheimer have a target of $18.
On the other hand, the consensus Archer Aviation stock target is $11.8, up sharply from the current $4.75. Canaccord, Needham, and Goldman Sachs see the stock rising to $12, $9, and $11, respectively.