“Electric Air Taxi Shares Face Extreme Turbulence Due to Market Volatility Triggered by Speculation, Rumour and Day Traders”

What a bonkers last five trad­ing days for elec­tric air taxi shares, in par­tic­u­lar for Archer and Joby Avi­a­tion. This was the stock mar­ket at its most crazy. A per­fect storm of innu­en­do, spec­u­la­tion, rumour and those mis­chie­vous imps, the day trad­er.

Until last Thurs­day, the Joby stock, for exam­ple, had been cruis­ing along, nice­ly, after a price rise dur­ing the sum­mer, where on June 30th, for exam­ple, the company’s share was at USD10.55 and by August 4th this had risen to USD20.39 or a 100 per­cent rise in just 45 days. 

This had been fol­lowed by a nat­ur­al sell-off reach­ing a short-term low of USD13.10 (Sep­tem­ber 4th). This is not an unusu­al price move­ment for one that is viewed as spec­u­la­tive by the mar­ket, although also poten­tial­ly — some time in the future — a major new indus­try.

So, Joby and the oth­er eVTOL com­pa­nies are not an invest­ment for the faint-heart­ed. The long-term investor must expect extreme volatil­i­ty and if not, invest in far safer, more blue-chip com­pa­nies where gain­ing 5 per­cent over a year is con­sid­ered sat­is­fac­to­ry. With Joby that can occur in one trad­ing hour of one day.

Mean­while, the company’s pri­ma­ry com­pa­tri­ot, Archer, had seen its stock decline from a high of  USD13.40 (July 17th) to a recent low of USD8.25 (Sep­tem­ber 10th), where it had tread water. 

Joby remains the top dog in the eyes of the mar­ket. The one to invest in if you dare to step in to this tur­moiled caul­dron.

Octo­ber 1st was the begin­ning of the mad­ness. Each com­pa­ny share had bro­ken through piv­otal tech­ni­cal lev­els, at the same time, attract­ing the day and short term traders. Yet, what fol­lowed next was extra­or­di­nary. 

The busi­ness Bul­letin Boards (BBs) were agog. A rumour spread like wild fire that Tes­la was show­ing inter­est in buy­ing Archer, trig­gered by the eVTOL com­pa­ny post­ing a video clip of its Mid­night Air­craft along­side a Tes­la Opti­mus robot. Cou­pled with the fact that Musk had tweet­ed a teas­er on X, stat­ing big news would be released on Octo­ber 7th. 

That was it. Crazi­ness ensued. 

On Fri­day, the Archer share price rose by 12.67 per­cent, fol­lowed on Mon­day by a fur­ther 18 per­cent. It was a feed­ing fren­zy. The chart looked like Nelson’s Col­umn.

On its coat­tails, Joby’s share price, for exam­ple, rose from USD16.22 (Octo­ber 1st) to USD19.57 on Monday’s close.

And guess what? The big reveal on Tues­day that Musk promised was about EVs. And since, Hump­ty Dump­ty has had a great fall.

Archer’s stock fell by over 8 per­cent yes­ter­day, but to real­ly rub salt in the wounds, Joby announced “straight after the Tues­day mar­ket close,” plans to offer an addi­tion­al USD500 mil­lion of com­mon stock and intends to grant under­writ­ers a 30-day option to pur­chase up to a fur­ther USD75 mil­lion of shares at the offer­ing price, less under­writ­ing dis­counts and com­mis­sions.

The mar­ket loathes this prac­tice as it dilutes the share val­ue for exist­ing share­hold­ers. Joby futures quick­ly dropped by 10%, after a pre­vi­ous mod­er­ate fall of just over 3 per­cent dur­ing trad­ing hours.

What is bla­tant­ly clear is that eVTOL shares are dri­ven by mar­ket sen­ti­ment and cer­tain­ly not busi­ness fun­da­men­tals. Add to this the stock volatil­i­ty which can be reg­u­lar­ly eight per­cent between the dai­ly low and high price, attract­ing the day and short term traders, the stocks have become the whip­ping boys for quick easy mon­ey, if played cor­rect­ly.

Pen­ny shares usu­al­ly dom­i­nate this mar­ket sec­tor where high risk offers quick returns or loss­es, sure­ly not, stocks that rep­re­sent the future of avi­a­tion?

Where is the respect? 

This present extreme volatil­i­ty fright­ens away many investors, espe­cial­ly those with USD mil­lions to invest like Hedge Funds and Finan­cial Insti­tu­tions. Would you risk your client’s mon­ey? Would an investor want their hard earned cash to be placed in such a high risk stock?

These last five trad­ing days, a lot of mon­ey has been made by astute short term traders who bought at the right price and then quick­ly sold out. The con­cern being that eVTOL stocks could become a laugh­ing stock and be lumped togeth­er with pen­ny shares.

Less volatil­i­ty is required if such shares are to be tak­en seri­ous­ly by the all-impor­tant back­bone of the stock mar­ket — the long-term investor. Hope­ful­ly, in time, this will occur and the day/short term trad­er will find anoth­er sec­tor to van­dalise.

(Top image: Cred­it — Eco­nom­ic Times)

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