Joby Aviation’s (NYSE: JOBY) technology has been again validated. The latest news is a follow-on investment from Toyota Motor (NYSE: TM), one of the company's earliest investors and a long-time proponent of personal air capability. The new deal will more than double Toyota’s investment in Joby, bringing the total to nearly $900 million, with funds distributed over the next two years. Toyota is a critical partner for Joby. Not only does it provide funding, but also powertrain and actuation components. Its engineers are working alongside Joby’s to make commercialized personal flight a reality.
The new funding aims to aid Joby in its certification process and production ramp, which are progressing nicely. Joby is roughly a third of the way through the fourth of five stages of U.S. certification, has delivered its first vehicles to the U.S. Air Force, and is making inroads into other markets, including the UAE. Terms of the new deal include a manufacturing alliance to bolster the already blossoming production capability. While there are still hurdles to cross, the outlook is bright and points to the commencement of commercial operations in 2025. Regarding the UAE, Joby has begun the certification process for commercial air taxi services.
And Toyota is not Joby’s only major investor. The company also has support from Delta Airlines (NYSE: DAL), which has a vision for city-to-airport hub transportation services to complement its current operations. The initial investment is worth $60 million and may be raised to as much as $200 million, not including ancillary investments from firms such as Virgin Atlantic. Virgin Atlantic, 49% owned by Delta, is reportedly working on a deal to bring premium air taxi services to applicable markets.
Analysts Sentiment Favors Joby Shareholders
Analyst coverage of Joby Aviation remains light in number but is noteworthy because of sentiment and the price targets. The latest updates are reaffirmed ratings from H.C. Wainright and Cantor Fitzgerald, which peg the stock at Buy/Overweight with a price target more than 50% above the recent action, which includes the recent 25% share price pop.
The notes suggest that Joby is progressing with milestones and deliveries, is on track to produce one vehicle monthly by the end of the year, and has several opportunities for commercialization likely to bear fruit within the next 12 months. Those include commercial operations in the U.S., increased demand from the U.S. government, and air taxi services in the Middle East. Among the opportunities for investors is the company’s vertically integrated production capability, which set it up to produce its components and maximize the software to operate them.
Insider Sales of Joby Stock Are No Problem for Shareholders
The insiders have been selling Joby on a quarter-to-quarter basis for the last two years but present no problem for the market. Insider sales align with activity resulting from share-based compensation and amount to less than 0.2% of the market cap with the stock at $6. Insiders and major shareholders still own more than 33% of the stock, and sales are offset by institutional activity. The institutions have been loading up on Joby shares in 2024, raising their holdings to roughly 45% of the shares with inflows more than doubling outflows over the past 12 months.
Short-Covering Adds Lift to Joby Aviation Stock Price Action
Joby’s stock price rocketed higher following the Toyota news, but more was driving the stock than the news. The market for Joby was more than 15% short as of the mid-September report, providing ample fuel for the squeeze. With commercial operations still several quarters away, it is likely that short interest will remain high and may cap gains until additional news is released. The critical target for resistance is near the $6.50 level, which may be reached soon. Assuming the market cannot cross that line and hold it, JOBY share price will likely remain range-bound near 2024’s lows. However, a move above $7.50 would alter the technical outlook and raise the chances for a sustained rally for Q4 2024 into 2025.
