Why Joby Aviation Soared 29.5% Last Month But Is Plummeting in June

Joby Aviation (NYSE: JOBY) stock saw strong gains in May's trading, rising 29.5% across the stretch. Meanwhile, the S&P 500 rose 5.2%, and the Nasdaq Composite surged 8.4% higher.

The broader market hosted strong bullish momentum for growth stocks last month, and a solid quarterly report helped support big gains for Joby. Despite a big pop last month, the company's share price is down roughly 28% year to date.

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Joby's Q1 report helped support big gains last month

Joby published its first quarter results on May 5, reporting sales and earnings that surpassed Wall Street's estimates. The business recorded a loss of $0.12 per share on sales of $24 million. The company's per-share loss was 0.09 lighter than anticipated, and its sales came in $3.8 million higher than the average analyst estimate.

Along with its fiscal Q1 report, Joby narrowed its revenue guidance for the year to between $105 million and $115 million. Even though the company's previous sales forecast had called for sales between $105 million and $150 million, the company's recent quarterly report and outlook update were enough to support big gains last month.

Joby trimmed the higher end of its full-year sales forecast, but investors were still relatively pleased with the sales outlook and the company's confirmation that it's on track to begin commercial flights this year. Investors broadly adopted risk-on positioning last month, and the trading backdrop helped facilitate big gains for the electric vertical take-off and landing (eVTOL) aircraft specialist.

Why is Joby stock slipping in June?

While Joby's share price saw a huge surge last month, it's given up much of those gains in June. As of this writing, the stock has fallen roughly 19.8% in June so far. Meanwhile, the S&P 500 is down 2.6%, and the Nasdaq Composite is down 4.7%.

After last month's strong bullish trading for growth stocks, investors have been shifting to risk-off positioning in June in response to concerns that the Federal Reserve could be on track to raise interest rates. The Bureau of Labor Statistics (BLS) published its May jobs report on June 5, and the report wound up having a big bearish impact on the broader market.

While economists had forecasted that only 80,000 nonfarm payroll positions were added last month, the BLS estimated that 172,000 positions were actually added in the period. With job growth coming in stronger than anticipated, investors shifted their holdings in response to expectations that the report had made it more likely that the Fed will hike rates this year.

Joby Aviation currently has a market capitalization of roughly $9.4 billion and is valued at approximately 84 times this year's expected sales. With such a highly growth-dependent valuation, Joby stock could face additional pressures if the Fed winds up raising interest rates.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.