Back in April, stock market investors were freaking out over tariffs. In hindsight, however, this proved to be a golden opportunity to shop for growth stocks. Many were simply coiled springs.
One that certainly fits into this category is Joby Aviation (NYSE: JOBY). Shares of the flying air taxi pioneer have gone from $5.93 on 11 April to a 52-week high of $12.33.
For those keeping score, that’s a gain of 108%!
It means any brave soul who loaded up on £10,000 worth of shares back then would now have about £20,000, even after adjusting for a weaker US dollar.
Dubai launch on track
I didn’t invest in Joby back in April, but it still leaves me with a dilemma. You see, I bought shares of Joby on three separate occasions last year. My cost basis was just over $5, meaning I’m now sitting on gains of more than 100%.
I’m bullish on the company’s long-term prospects. It recently carried out successful piloted test flights of its electric vertical take-off and landing (eVTOL) aircraft in the United Arab Emirates (UAE).
This is ahead of a planned launch next year in Dubai, where Joby has exclusive rights to operate air taxis for six years. It intends to charge passengers the same as a premium Uber ride.
Founder and CEO JoeBen Bevirt announced: “Our flights and operational footprint in Dubai are a monumental step toward weaving air taxi services into the fabric of daily life worldwide.”
The company aims to introduce its service at Dubai International Airport, Palm Jumeirah, Dubai Marina, and Dubai Downtown, with vertiport construction already well underway. Management says the airport-to-Palm Jumeirah trip will only take 12 minutes, significantly cutting down a 45-minute car ride.
That’s not surprising, as Joby’s aircraft can transport a pilot and up to four passengers at speeds of up to 200 mph, while emitting almost no noise and zero emissions.
Meanwhile, Saudi Arabia is exploring the purchase of Joby’s eVTOLs, in a deal worth up to $1bn.
What dilemma?
All of which begs the question: what dilemma am I referring to? Well, Joby’s market cap is now north of $10bn, despite the firm being pre-revenue and still needing to gain full certification from the US Federal Aviation Administration (FAA).
The UAE news is great, but there’s risk that a delay in regulatory approval in the US sends the stock down sharply.
As for profits, we have no idea when those might emerge because Joby is building out a brand new mode of air travel. That’s going to take time and a lot of capital.
Thankfully, Joby has around $1bn on the balance sheet, as well as the expertise of manufacturing partner and backer Toyota.
According to Grand View Research, the global eVTOL market could be worth over $28bn by the 2030s. Joby is currently leading the race to capture a large chunks of this.
Taking chips off the table
What I will do here is sell half my position and redeploy the profits into other stocks. That way, I get to keep a sizeable position in Joby, while also minimising risk in my portfolio.
Investors interested in Joby should understand the risks here, and expect massive volatility. It’s a fascinating stock, albeit now a very speculative one at $12.
