Joby Aviation Stock Sinks on Latest News. Will the eVTOL Ever Recover Its Lost Value?

It's been a wild year for stockholders of Joby Aviation (NYSE: JOBY). In July 2025, the stock rocketed upward more than 75% as interest in electric vertical takeoff and landing (eVTOL) aircraft surged. By early August, the stock was up 107.8%. But that turned out to be the high point for Joby investors.

Since then, the stock has taken shareholders on a bumpy ride downwards. Last week alone, it dropped 20.2%. Now it has a negative one-year return:

Given the speed and severity of that drop, you might think that some major unfavorable news made investors flee the stock. You'd be right, but the news probably isn't what you'd expect. Here's what really happened to make Joby's stock tumble into the red, and what investors should expect next.

Times aren't tough all over

The news that gave Joby's shares their 20% haircut last week also hit its rival Archer Aviation (NYSE: ACHR), which saw its stock price fall 19%, along with growth stocks across the market. For example, high-growth memory stock Micron Technology (NASDAQ: MU) dropped by 16.6%, and AI voice chatbot company SoundHound AI (NASDAQ: SOUN) plunged 20.1%.

Image source: Getty Images.

Ironically, the news wasn't what most of us would think of as "bad news." Instead, it was the Bureau of Labor Statistics (BLS) announcement that the U.S. economy added 172,000 nonfarm jobs in May. That's more than double what economists were expecting, and it followed a strong April jobs report that showed a gain of 179,000 nonfarm jobs. Even though the biggest drivers of those gains were jobs in leisure and hospitality and local government -- possibly indicating a large percentage of seasonal summer employees -- larger-than-expected job gains ought to be good for the economy. So, what gives?

All about the interest

The job gains won't really have an impact on Joby's operations. And even though Joby's most recent company-specific news -- including completing New York City's first-ever point-to-point eVTOL air taxi demonstration flights and the dismissal of Archer Aviation's counterclaims in its trade secret lawsuit -- was positive, the jobs report caused investors to sell off the stock.

That's because two consecutive months of strong job reports make it more likely that the Federal Reserve will raise interest rates. Inflation has been creeping upward, and came in at 4.2% last month. The Fed's target inflation rate is 2%, and interest rate hikes are its primary tool to bring inflation down.

Image source: Joby Aviation.

A weak jobs report might have convinced the Fed to hold off on rate increases to avoid disrupting the labor market. But with the labor market looking strong, analysts now believe rate hikes are imminent. Federal rate hikes generally hurt high-growth companies like Joby that need to borrow to sustain their operations; such hikes may encourage investors to move their money into less risky alternatives.

Joby's shares are down more than 50% from their all-time high and are now trading just above their average price. That ups the odds that the company's shares will rise significantly if it receives FAA approval to begin commercial operations. However, Joby remains a speculative and volatile stock, and its long-term outlook is still in doubt. Only the most risk-tolerant of investors should consider buying Joby shares at this stage.

John Bromels has positions in Micron Technology. The Motley Fool has positions in and recommends Micron Technology and SoundHound AI. The Motley Fool has a disclosure policy.