The eVOTL (Electric Vertical Takeoff and Landing) industry has plenty of potential with a TAM of potentially $135Bn in the next decade. Joby Aviation (JOBY) and Archer (ACHR) can benefit if they execute well.
This company along with Joby Aviation does hold promise if these aircraft take off, as they’ve been trying for several years now, but the timelines continue to slide towards safety protocols and commercialization.
Should they clear these hurdles, meaningful revenue forecasts are for $512Mn in 2028 and $1.6Bn. in 2029. At present, Archer’s market cap is $4.7Bn or 3x 2029 revenues - not bad, and it has come down almost 60% from its peak.
For Joby the multiple is much higher - it is $9.8Bn for $455Mn and $1.07Bn, respectively or 9.6x 2029 revenues.
Archer has made progress with the initiation of piloted transition flights, but certification has been pushed out until at least 2027. It has had a history of slow progress on design changes and aircraft problems, besides flight testing, certification, and manufacturing.
Joby, on the other hand, has a more advanced certification progress, with FAA-conforming aircraft flight and Type Inspection Authorization flights expected this year, marking a major milestone.
The eVTOL opportunity is large several avenues for revenue, including defense and urban commercial transportation. The TAM is estimated at $3Bn in 2026, growing to $122Bn in the next decade at a CAGR of 36%. Archer's stock will also likely continue to benefit from its relationship with high-profile companies like Anduril and Palantir (PLTR). Joby's tie-ups with Delta and Uber also provide opportunity.
On another positive note, they have deep pocketed investors, and $1.7Bn each in net cash, which is absolutely necessary because of the high cash burn rate.
Archer - Stellantis, United Airlines, Anduril and Abu Dhabi Investment Office.
Joby - Toyota - $1Bn investment, Delta, and Uber.
The biggest risks are execution, cash burn and dilution as they continue towards commercialization - Neither will be profitable before 2031, assuming they reach their certication milestones.
I had taken a small position in both at one time, and exited, and I would veer towards Joby if I had to get back in again, simply because of the Toyota backing and the more advanced progress towards certification.
Uber's market leadership and decent valuation are positives. At $60 is a good bargain. It can easily return 15-16% a year.
