Micah Angel, a contributor for the financial website, The Motley Fool, posted an article about Vertical Aerospace (EVTL) earlier this week, which was then picked up and republished by more than 15 different online sites. Angel asks that evoking question: Has the time come to invest in Vertical Aerospace (VA)?
Anyone who attended July’s Farnborough Airshow and visited VAs trade stand would have been highly impressed by the full-scale VX4 on display. So much so, that the share price rose 20 percent on the back of favourable media reviews. Since, the price has fallen back. Unfortunately, shares for all eVTOL companies on the Stock Market have been in the doldrums for much of this year.
Angel discusses the importance of timing and supports this by news of VAs impending first test flights alongside partnerships with gold-plated global companies like Rolls-Royce, Virgin Airlines, Microsoft, Solvay and Honeywell, who offer engineering and manufacturing expertise alongside the all-important funding for R&D.
These collaborations provide Vertical Aerospace with obvious advantages over its rivals. For example, Honeywell Aerospace, a global pioneer in avionics, builds advanced flight control systems for Vertical’s VX4 Aircraft and assists with flight simulation testing, while Rolls-Royce offers its expertise on propulsion systems.
Angel writes, “With demand accumulating, Vertical Aerospace’s real work starts now. It will have to prove to the world that its tech is functional, worthwhile, and above all, safe.”
He points out that VA pushes to “not only spearhead an entirely new flying taxi market, but also to disrupt and displace the existing helicopter industry.” eVTOL improvements include better safety, far less noise, carbon-free green travel and reduced operating costs.
Angel remarks the company’s most formidable challenge is proving its aircraft are safe. He says, “Certification stands firmly in Vertical Aerospace’s crosshairs in the near term. The company will need to demonstrate to regulators that its aircraft meet the highest global standards of aerospace safety.”
Initially, the company financials look daunting. The cost to design, build, test, and operate aircraft, especially cutting-edge ones, is highly significant. In the first half of this year, VA reported a net operating loss of UKP39 million or a 79 percent increase from the same period last year with the company expecting to spend up to UKP50 million more by year’s end.
On the positive side, Vertical has drummed up plenty of interest for its VX4 with pre-orders coming from American Airlines, Virgin Atlantic and Aircraft leasing company Avolon. Aside from the passenger travel business, VA has also secured pre-orders for uses in emergency medical and cargo service industries.
VX4 on Display At Farnborough Airshow
Due to this, Vertical grew its pre-order book to over 1,400 VX4 craft in the second quarter with a total value of USD5.6 billion. While, American Airlines committed to a pre-delivery payment for its first 50 craft on an order that could reach 350 units. According to company CEO, Stephen Fitzpatrick, “The outlook for eVTOLs and Vertical has never looked better.” Meanwhile, VA has enough cash on hand to continue operations for at least another year.
Angel then states the obvious. Investing in Vertical is all about the appetite for risk. He writes, “While risk-averse investors might avoid speculative start-ups like this altogether, those with a higher risk tolerance, and some patience, could see an investment in Vertical Aerospace really take off.” Pointing out, “Keep in mind that higher-risk investments such as these can present significantly more volatility than blue chip stocks and also have a much higher rate of failure.” He goes on, “Therefore, risk-averse investors should wait until the company’s concept is proven and its product truly lives up to the hype.”
Angel ends his article by citing investment guru, Kevin ‘Mr Wonderful’ O’Leary, who once said, “Vision is nothing without a plan to execute it.” And suggests that investors with a longer time horizon and an appetite for more risk could live to see a future where air travel is far more convenient than ever before.
He concludes, “If Vertical Aerospace can execute its plan with minimal delays, this tech stock could ascend to be a leader in the emerging flying taxi market.”
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(News Source: https://www.fool.com)