Shares of Blade Mobility Inc. (NASDAQ: BLDE) are up more than 18% the day after the company delivered its first quarter earnings.
Blade Mobility provides air transport alternatives with a fleet of helicopters, private jets, turboprops, and amphibious seaplanes. The company’s business is divided into Medical Services and Passenger Services verticals. The Medical Services vertical is about organ transport (primarily hearts, livers, and lungs), accounting for 58% of the company’s revenue. This business includes contractual relationships with transport hospitals.
That leaves about 42% of the company’s revenue in Passenger Services. This includes short-distance flights between 10 and 100 miles as well as long-distance private jets.
The small-cap urban air mobility company delivered a double beat punctuated by the first-ever profit in its passenger category. As the world starts to prepare for a world of air taxis, is this rally the one that will send BLDE stock soaring?
A First-Time Profit Fuels Optimism
There was a lot to like about Blade’s earnings report. Revenue of $54.3 million beat expectations of $49.3 million, a 10% beat. Earnings per share came in at a loss of four cents, beating analysts’ forecasts for a loss of 11 cents. Blade was also able to beat expectations by posting its first-ever EBITDA profit of $0.1 in its passenger segment.
Adding fuel to the positive report, Blade reaffirmed its full-year revenue guidance of $245 million to $265 million. At the midpoint, that would be a 2% year-over-year (YOY) gain. The optimism is based on less aircraft maintenance activity in the second half of the year as well as ongoing cost-saving initiatives.
This SPAC May Be More Than a Four-Letter Word
Blade Mobility went public in 2020 via a special purpose acquisition company (SPAC). Many SPAC stocks were part of the meme stock movement popularized by traders who frequented groups such as WallStreetBets.
Penny stocks have always been attractive to traders. But many of these stocks fell on hard times in late 2021 as interest rates began to rise and investors lost their appetite for unprofitable companies. That was true of Blade. Even though the company has an asset-light model, it was still in the early stages of monetizing its business.
[content-module:TradingView|NASDAQ: BLDE]While many SPAC stocks may never recover, BLDE stock has a chance to be different. Even though it is down approximately 80% from its high, it is solidly off its 52-week low. In addition, the post-earnings surge has lifted the stock past its 200-day simple moving average (SMA), which frequently indicates bullish momentum.
There Are Enough Seats at the Table
Interest in electrical vertical take-off and landing vehicles (eVTOLs) is growing. So, it’s important to note that the air mobility sector is broad enough to cover many business services stocks.
The core of Blade’s business, organ transplants, is an area in which it has a significant first-mover advantage. In fact, this is an area that companies such as Joby Aviation Inc. (NYSE: JOBY) and Archer Aviation Inc. (NYSE: ACHR) are unlikely to be able to compete in.
[content-module:Forecast|NASDAQ: BLDE]In the area of passenger travel, it will take time for eVTOL companies to build out their network. In the meantime, the emergence of these flying taxis may help give Blade’s offerings more exposure.
Blade is not yet profitable, but some analysts believe that the company, which currently has no debt on its balance sheet, can deliver profit margins in the mid- to high single-digit range. That would support a single-digit price-to-earnings (P/E) multiple for investors willing to hang on for several years.
Although it’s not heavily covered by analysts, BLDE stock has overwhelmingly bullish sentiment. The consensus price target of $6.25, which would be an 81% increase in the stock price.
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