Electric Vertical Take-Off and Landing (eVTOL) stocks are not having a good year as investors dump unprofitable companies. Joby Aviation (NYSE: JOBY) stock price has crashed to $4.60, its lowest level since May 2023. It has retreated by over 61% from its highest point in 2023, erasing almost all gains it made during the year.
eVTOL stocks have been in a freefallLilium’s stock has also continued falling, reaching a low of $0.80 on Tuesday, its lowest point since May last year. It has plunged by 57% from its highest level in 2023. Archer Aviation, and other eVTOL company, has slipped to $3.86, its lowest point since June last year.
Lilium vs Archer Aviation vs Joby Aviation
These declines have cost their investors billions of dollars even as the companies have made a lot of progress. Lilium, the German eVTOL company, received a design approval by European regulators in November last year. It hopes to receive full certifications by US and European regulators in the near term.
Joby Aviation has also completed the third stage of its FAA certification process and the company hopes that it will start its flying taxi business by 2025. That is notable for a company that is backed by Toyota, one of the best manufacturers in the world. It has also received big purchase orders from the US military.
Archer Aviation has also received several certifications from the FAA. In February, it received Part 145 certification, a move that will allow it to operate repair and maintenance stations. It plans to start commercialization in 2025.
There are three main reasons why these eVTOL stocks have retreated sharply this year. First, from a macro level, there are signs that investors are moving from risky stocks to safe havens as hopes of rate cut by the Federal Reserve fade.
In addition to flying taxis companies, investors have also dumped EV companies like Nio and Tesla as these concerns continue.
Dilution risks remainSecond, there are lingering concerns that the companies will continue diluting their shareholders. Most of these firms have continued to do that by raising cash in the past few years.
For example, Archer Aviation’s outstanding shares have jumped from 50 million in 2021 to over 265 million today. It ended last quarter with $471 million in cash and short-term investments, meaning that it may raise more money ahead of its commercialization plan. It had a net loss of over $457 million in 2023.
Joby Aviation has also been highly dilutive as the number of shares has jumped from 69 million in 2021 to over 698 million today. It has over $1 billion in cash today.
Lilium has also raised capital from investors. The company raised $250 million to help it continue with its research and certification process.
Therefore, analysts believe that these companies will need to raise more cash ahead of the planned commercialization, a move that will dilute existing shareholders.
On the positive side, these companies have a pole position in an industry that is expected to grow in the next few years. The industry jumped to over $10 billion in 2023 and the estimate is that it will have a 13.6% CAGR until 2028.
They have also received substantial orders. For example, Lilium has firm orders of 45 aircraft from Lufthansa and 685 under the MoU. United Airlines has also made a $1 billion order from Archer Aviation. It has a backlog of over $3.5 billion.
Therefore, I believe that these stocks are high-reward and high-risk. They have a chance of going up sharply if they work out well and vice versa. In the near term, however, I suspect that their volatility will continue.
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