Heavy Upfront Investment And Autonomy Bets Will Limit Long Term Earnings Potential

Catalysts

About Joby Aviation

Joby Aviation is developing electric vertical takeoff and landing aircraft and related services for passenger air taxi and defense applications.

What are the underlying business or industry changes driving this perspective?

• The company is investing heavily ahead of broad commercial adoption, including scaling manufacturing with Toyota, building out facilities in Marina and Dayton, and preparing global operations. This could keep cash use high and delay earnings leverage if real air taxi demand or pricing power falls short of expectations, pressuring future net margins.
• Joby is tying a key part of its long term story to autonomy and hydrogen propulsion, areas that depend on regulatory shifts and infrastructure that are still forming. Any slower than hoped uptake for autonomous aviation or hydrogen fueled aircraft could limit utilization of past R&D and capital spending, affecting future revenue and returns on invested capital.
• The eVTOL sector is moving into a more regulated and capital intensive phase, with Joby now in the costly final stages of FAA Type Certification and building five TIA aircraft. Any slippage in certification timing or test results could extend loss making periods and push out the ramp in operating earnings.
• Management is positioning for very high aircraft production rates that have not occurred in traditional aviation. Yet the early air taxi use cases Joby highlights, such as short haul premium commuter and airport routes via Blade, remain relatively niche, which could limit achievable load factors and pricing and cap revenue growth versus what the current valuation implies.
• The business model now spans manufacturing, a vertically integrated air taxi network, defense variants, autonomy software and Blade’s existing helicopter routes. This breadth of initiatives could stretch management focus, introduce integration risks and keep operating expenses elevated, which may weigh on future net margins and delay any path to sustained earnings.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Joby Aviation's revenue will grow by 169.0% annually over the next 3 years.
• Analysts are not forecasting that Joby Aviation will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Joby Aviation's profit margin will increase from -4657.2% to the average US Airlines industry of 7.1% in 3 years.
• If Joby Aviation's profit margin were to converge on the industry average, you could expect earnings to reach $31.3 million (and earnings per share of $0.03) by about January 2029, up from $-1.1 billion today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 545.8x on those 2029 earnings, up from -12.4x today. This future PE is greater than the current PE for the US Airlines industry at 9.9x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.96%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Joby reports a Q3 2025 revenue figure of US$23 million, supported by Blade’s air mobility business and defense and engineering services work. This shows the company is already converting parts of its ecosystem into sales. A sustained build out of routes, partnerships and government programs could support higher revenue than a bearish view assumes.
• The company ends Q3 2025 with US$978 million in cash and short term investments and then raises an additional US$576 million. A total liquidity position of roughly US$1.55b gives Joby scope to continue funding certification, manufacturing and commercialization without immediate pressure for dilutive or distressed financing, which could support long term earnings potential.
• Entering the final Type Inspection Authorization stage, building five TIA aircraft under an FAA approved quality system and gaining ongoing FAA engagement even during a government shutdown suggests regulatory progress is advancing. Successful completion of this process could enable commercial operations that support revenue and eventually net margins.
• The acquisition of Blade, the development of high frequency airport and commuter routes in the U.S. and Europe, and early route expansion such as Dubai, Japan and potential eIPP operations give Joby a running start on real world air taxi networks. This could underpin future load factors, pricing and route density that support revenue and operating leverage.
• Defense and autonomy programs, including the hybrid aircraft with L3Harris targeted at part of a US$9b U.S. Department of War budget request, Superpilot autonomous flight trials over 7,000 miles and the partnership with NVIDIA for high performance onboard compute, create additional paths to monetize Joby’s technology stack beyond passenger air taxis. This could diversify revenue and help long term earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of $12.14 for Joby Aviation based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $22.0, and the most bearish reporting a price target of just $6.0.
  
• In order for you to agree with the analysts, you'd need to believe that by 2029, revenues will be $440.9 million, earnings will come to $31.3 million, and it would be trading on a PE ratio of 545.8x, assuming you use a discount rate of 8.0%.
  
• Given the current share price of $14.36, the analyst price target of $12.14 is 18.3% lower. Despite analysts expecting the underlying business to improve, they seem to believe the market's expectations are too high.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.