Could buying this growth stock at $5 be like investing in Nvidia in 2010?

Joby Aviation (NYSE:JOBY) has massive potential as it nears commercial lift-off. Can this growth stock deliver life-changing returns from $5?

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Trying to spot the next Nvidia-like growth stock is no easy feat. These firms are often operating in emerging industries that many people think are overhyped or unrealistic.

Take the internet, for example. It was still being touted as a “passing fad” in 2000 by some newspapers. In 2009, Charlie Munger explained to a table full of people all the ways the electric vehicle start-up Tesla would fail, according to Elon Musk.

Nowadays, nobody questions the internet or EVs, while Amazon and Tesla haven’t done too badly. Nvidia stock is up a staggering 51,180% since 2010!

So where might the ‘next big thing’ be? Well, to most people, the idea of electric flying taxis sounds like pie-in-the-sky stuff (literally). Yet this industry is tipped for extraordinary growth.

A leader in the space today is Joby Aviation (NYSE: JOBY), whose shares cost $5 apiece. I recently added more to my portfolio.

The Uber of the Sky

The company has built an electric vertical take-off and landing (eVTOL) aircraft and plans to begin an air ride-hailing service.

These eVTOLs fly at speeds of up to 200 mph and are near-silent, meaning they could play a key role in the green revolution. Each one carries four passengers and a pilot, though Joby aims to make them autonomous.

The firm is backed by Toyota, Delta Air Lines and Uber. These are well-chosen strategic partners. Toyota is assisting with manufacturing, while Delta and Uber aim to help reduce commutes between John F Kennedy Airport and nearby areas from one hour to seven minutes.

Joby acquired Uber’s flying taxi venture in 2020, and the two firms agreed to integrate their respective services into each other’s apps. I think partnering with Uber, which now has 149m customers using its platform, will give the firm a noteworthy competitive advantage.

Global ambitions

Initially, the company intends to start services in New York and Los Angeles. However, it recently signed an exclusive six-year agreement agreement to provide air taxi services in Dubai.

Plus, it will sell aircraft to Mukamalah, the aviation arm of oil giant Saudi Aramco, which will introduce eVTOLs to Saudi Arabia.

Last year, the firm also delivered the world’s first ever electric air taxi to the US Air Force. So there are two parts to the business here. One is the ride service for consumers and the second is selling eVTOLs to firms and organisations around the world that want to reduce their carbon footprint.

Timeline

Joby plans to start commercial operations in 2025. However, there could be delays as it’s still working towards securing full airworthiness approval from regulators.

Source: Joby Aviation 2023 annual report

Meanwhile, the firm is losing around $100m per quarter right now. This makes the investment very risky.

However, it did have $924m in cash on the balance sheet at the end of March. So it seems adequately capitalised, at least for now.

A high-risk stock

In conclusion, Joby plans to start offering a greener and faster alternative to driving that’s bookable at the touch of an app. JPMorgan sees this global eVTOL market being worth $1trn by 2040.

The stock could deliver Nvidia-like returns in the years ahead or crash and burn. Therefore, it’s only a small part of my overall portfolio.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Ben McPoland has positions in Joby Aviation and Tesla. The Motley Fool UK has recommended Amazon, Nvidia, Tesla, and Uber Technologies. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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