Better eVTOL Stock: Joby Aviation vs. Archer Aviation

Joby Aviation (NYSE: JOBY) and Archer Aviation (NYSE: ACHR) both produce electric vertical takeoff and landing (eVTOL) aircraft. These sleek electric aircraft are greener and easier to land in dense urban areas than conventional helicopters.

But over the past 12 months, shares of Joby and Archer have both declined by more than 50%. Investors shunned both stocks for similar reasons. First, the Federal Aviation Administration (FAA) hasn't approved either company's eVTOLs for commercial flights in the U.S. yet. Second, inflation and fears of rate hikes are compressing their valuations. Should you buy either of these out-of-favor eVTOL stocks as the bulls look the other way?

Image source: Joby Aviation.

Which company has more irons in the fire?

Joby's S4 and Archer's Midnight both carry a single pilot and four passengers. The S4 travels up to 150 miles on a single charge at a maximum speed of 200 miles per hour. The Midnight only has a range of 100 miles with a maximum speed of 150 miles per hour.

The S4 travels faster and farther than the Midnight by using single-tilt-rotor propellers for both lifting and cruising. The Midnight uses two separate propellers for those tasks, which makes it heavier, slower, and less energy-efficient. Joby is also developing a hydrogen-powered version of the S4, which could be charged much faster than the battery-powered one, but Archer isn't.

Joby aims to become a vertically integrated "transportation as a service" business that manufactures, owns, and operates its own air taxi network. Archer is an original equipment manufacturer (OEM) that sells most of its aircraft to third-party fleets. Joby's supply chain is also tighter than Archer's because it uses more first-party components.

Joby and Archer both work with the Department of Defense (DoD), and they have some big commercial investors and partners. Joby's top backers include Toyota, Delta Air Lines, and Uber. Archer's partners include Stellantis and United Airlines. Toyota and Stellantis will help them manufacture their eVTOLs, while Delta and United plan to use those eVTOLs to provide airport-to-home air taxi services as add-ons to their commercial flights. Uber plans to integrate Joby's air taxi flights directly into its platform via its upcoming "Uber Air" service. Both companies plan to launch their first commercial flights in the U.S. and the UAE.

What company has a brighter future?

Joby is farther along in the FAA's multi-stage approval process for its first commercial flights than Archer. Joby is also generating more revenue than Archer today through its Blade air-taxi helicopter subsidiary, which it acquired last year. Here's what analysts believe will happen over the next few years, assuming the FAA finally approves both companies' commercial flights.

Data source: Marketscreener.

We should take those estimates with a grain of salt, but Joby should grow at a more stable rate as it establishes itself as a tightly managed, first-party eVTOL producer. Archer's sales could also soar over the next few years, but only if it wins more OEM orders from other companies.

Joby and Archer trade at 15x and 7x their projected 2028 sales, respectively. Joby is certainly the pricier stock, but I believe its technological advantages, faster regulatory progress, and tighter business model all justify that higher valuation. Joby's higher revenues and liquidity today also make it a safer investment in this choppy market. Both stocks could eventually soar as the nascent eVTOL market expands, but Joby is clearly a better buy than Archer right now.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool recommends Delta Air Lines, Stellantis, and Under Armour. The Motley Fool has a disclosure policy.