Last week was yet another milestone for Joby Aviation after the company released its shareholder letter covering Q4, 2022. Not only did the financial markets warmly embrace the report, but for the first time are broadly taking the company seriously as a potential share investment for the future.
While, 2022 was an up-and-down year for Joby Aviation, in particular, the damning report from Bleeker Street Research in October with the charming headline, ‘Joby Aviation…is Set To Crash and Burn’, the company continues to forge ahead unperturbed by such negative criticism.
Fourth Quarter 2022 Highlights
Means of Compliance Complete
We effectively completed the second of five stages required by the Federal Aviation Administration (FAA) to certify our aircraft for commercial passenger use, in what we believe is a first for the eVTOL industry.
FAA Administrator Visit
We hosted acting FAA Administrator, Billy Noel, and members of his team at our production facility, where they were able to see our pilot manufacturing line and observe one of our regular test flights.
We also made substantial progress in the later stages of the type certification process, with an additional four Area Specific Certification Plans (ASCPs) submitted to the FAA, a total of five ASCPs now accepted, and the successful completion of the second of four System Review stages.
Final Assembly Begins
We began final assembly of the first aircraft to be manufactured on our pilot production line. Having built the major aerostructures – the wing, tail, and fuselage – we are now mating the structures together and installing woring, electronics and other systems.
The report states, “At the end of the fourth quarter of 2022, we had USD1.1 billion in cash and short-term investments, including Delta’s upfront equity investment of USD60 million received in the quarter. Net cash used in operating activities and purchases of property and equipment totalled USD291 million in 2022, with USD84 million spent in the fourth quarter. In the quarter, we acquired land and facilities in Santa Cruz for USD25.5 million to support Joby’s long-term growth.”
It continues, “Our net loss of USD66.9 million reflected operating expenses of USD101.4 million partially offset by other income of USD34.5 million. Operating expenses reflected primarily our continued progress certifying the aircraft and early manufacturing operations and included stock-based compensation expenses of USD17.2 million. Other income included a favourable revaluation of derivative liabilities worth USD25.9 million and interest income on our investments. “
Shareholders Full Letter Q4 2022
The financial websites jumped onboard. Two of the leading sites are The Motley Fool and Seeking Alpha. The Fool writes, “Joby lost more money than expected in the most recent quarter, but the bigger news is that the air-taxi pioneer is on course to navigate through the rigorous certification process and has begun final assembly of its aircraft.”
It continues, “Joby appears to be ahead of the competition in the race to bring an eVTOL to market, based on where it stands with the FAA, and its prototype has already logged more than 10,000 miles of flight testing… While the company posted an operating loss of USD66.9 million in the fourth quarter and will continue to burn cash until the FAA process is complete, it has USD1.1 billion in cash and investments in the bank.”
Adding, “There is still a lot of risk here, (but) the company is demonstrating it is moving in the right direction. For those seeking high-risk, high-reward options for a well-diversified portfolio, Joby deserves a look.”
Seeking Alpha comments, “Joby’s results show encouraging progress. If you compare it to other publicly traded eVTOL companies, you’ll find that it’s been working on the technology for longer, is more vertically integrated, and has benefited from strategic manufacturing partnerships like the one with Toyota. This first-mover advantage will be substantial. Following certification, I expect a market opportunity greater than the current size of the helicopter market.” Adding, “As new applications are found for Joby, I believe the market for it will grow to a size that could surprise many industry experts.”
The article concludes, “I remain a buy. The company seems to be on the right track. I anticipate passenger service to begin in 2025 as planned and with ongoing progress in compliance, manufacturing and testing, I believe Joby is well-positioned to succeed despite any obstacles it may encounter. While investing in the company requires an extreme long-term view and high tolerance for volatility, I have confidence that the company is equipped to execute its plan and achieve its goals.”
A stamp of approval then came from Bloomberg TV with a positive 3’.53” interview with Joby Founder and CEO, JoeBen Bevirt.
Meanwhile, investchronicle.com led with the headline, “Investors Have A Limited Window Left To Buy Joby”; setenews.com had the grabbing “Joby: Prepare yourself for Liftoff”; and nasdaq.com got ‘all day-traderish and technical’ with “Joby makes bullish cross above critical moving average.”
Then dbtnews.com commented, “Based on careful and fact-backed analyses by Wall Street experts, the current consensus on the target price for Joby shares is USD7.62 per share (compared to the present USD4.55).” More importantly, after the report was released stocks held by institutional investors “increased by around 20.3 million shares.” Presently, they hold close to 193 million, according to a latest SEC report filing.
The ensuing publicity created an immediate stir in the financial markets propelling Joby shares up 16 percent during last Thursday’s trading day.
Comments on the financial bulletin boards were as expected: polarised. From Natturner1966, “That’s a huge vote of confidence for Joby. I’m buying more shares this week,” to energyguy921 posting, “This company will never get off the ground. They are selling a concept to meme traders and clueless dopes. Avoid at all costs!”
Certainly, 2023 is looking a lot rosier for Joby and JoeBen. By being ahead of the pack, the company is in poll-position for first-mover advantage. Add to this the consistent and positive news emanating from the company which evtolinsights.com regularly covers, whether it is about Osaka and Dubai, compliance testing from California or the increasing trials for the USAF, Joby may be a risky long-term investment, but one perhaps, that is worth the gamble, especially when the share price remains at such a low level.
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(Top image: Joby Aviation)