The pace of technological change is accelerating so much that it’s now normal for the fanciful to become reality, and then something of a standard. Witness, for example, the rapid ascent of electric vehicles (EV), which are now commonplace on our roads.
It looks like this transformation is also about to happen with cutting-edge air taxi developer Joby Aviation (NYSE: JOBY). Despite a few recent pullbacks, the company’s share price has rocketed dramatically higher this year thanks to several favorable developments.
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It’s an exciting stock, but given that rise, is it now overvalued?
Joby’s specialization is electric vertical takeoff and landing (eVTOL) taxis. The company’s four-passenger craft, which share certain aspects of both helicopters and propeller airplanes, have a small profile and are therefore ideal for tight urban environments. These will be the inaugural markets for air taxi services.
And they might open sooner than you think. In October, the Federal Aviation Administration (FAA) took a big step toward sanctioning such services. It went so far as to introduce a new category of air transportation, powered lift — which includes air taxis. This came not long after the company got the green light to operate air services for customers. So Joby’s ambitions are hardly — pardon the pun — pie in the sky.
Meanwhile, the craft that will ferry the first customers are currently in active flight testing, and Joby recently flew an exhibition flight in New York City. Its initial ambitions are to launch services both in that municipality and in car-clogged Los Angeles. It’s also making significant inroads abroad already, with a pending application to become the first air taxi service in the United Arab Emirates and with construction underway for a “vertiport” in Dubai.
The company has also secured different types of partnerships with powerful businesses in the transportation sphere. In October 2022, it signed a deal with Delta Air Lines to integrate Joby’s operations in a home-to-airport air taxi service. Cutting out the often stressful and long rides to/from the terminal is an attractive proposition for travelers, many of whom would likely be willing to pay a premium for a far easier commute.
Delta’s involvement came with a $60 million investment in Joby, and it’s not the only well-known enterprise adding to the company’s capital base. In a series of investments over the past few years, auto industry giant Toyota Motor has committed $894 million to the air taxi specialist to help fund its continued development work.
