Archer Aviation vs. Joby Aviation: The eVTOL Winner Might Surprise You

Key Points

• Archer and Joby both plan to disrupt the helicopter market.

• But neither company is mass producing eVTOL aircraft yet.

• Both stocks are expensive, but one seems like a better value.

• 10 stocks we like better than Archer Aviation ›

Archer Aviation (NYSE: ACHR) and Joby Aviation (NYSE: JOBY) are both early movers in the nascent electric vertical takeoff and landing (eVTOL) aircraft market. Both companies went public by merging with special purpose acquisition companies (SPAC), set some bold growth forecasts, but missed those estimates by a mile.

Archer, which initially aimed to generate $42 million in revenue in 2024, hasn't generated any revenue yet. Joby, which claimed it could generate $131 million in revenue in 2024, generated a mere $136,000 in revenue from its U.S. Air Force (USAF) contract for the full year.

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Image source: Archer Aviation.

That's why it might seem absurd that Archer and Joby still have market caps of $6.2 billion and $12.8 billion, respectively. Yet the bulls expect them to grow into those valuations -- and beyond -- as they scale up their businesses. So which stock is a more promising play on the speculative expansion of the eVTOL market?

The similarities and differences between Archer and Joby

Archer and Joby are both trying to replace traditional helicopters with their eVTOL aircraft, which are a greener, quieter, and easier to land in densely populated urban areas. Those strengths make them well-suited for short-range taxi services.

Both companies are backed by big airlines and automakers. Joby's top investors include Delta Air Lines and Toyota, while Archer's leading backers include United Airlines and Stellantis. Both companies hold contracts with the USAF, they're backed by Saudi Arabian investors, and they're expanding into the Middle East. They've also both nearly finished the Federal Aviation Administration's (FAA) five-stage certification process that will clear them for commercial flights in the United States.

Archer's Midnight and Joby's S4 can both carry a single pilot and four passengers. However, the S4 can last for 150 miles on a single charge, while the Midnight has a shorter range of 100 miles. The S4's max speed of 200 mph also exceeds the Midnight's top speed of 150 mph.

The S4's advantages can be attributed to its tilt-rotor propellers, which are used for both lifting and cruising. Those propellers fully rotate forward while cruising, which allows it to fly faster and more efficiently like a fixed-wing aircraft. The Midnight uses separate propellers for lifting and cruising, and its lifting propellers add more drag as it flies forward. Archer promotes the Midnight for shorter urban trips, while Joby is positioning the S4 as an option for longer intercity routes.

Joby hasn't publicly disclosed the price of the S4, but it's reportedly much cheaper than the Midnight, which costs about $5 million. Joby has also been developing a hydrogen-powered model, while Archer is sticking with battery-powered models.

Joby clearly has some technical advantages against Archer, but Archer has a less capital-intensive manufacturing process. While Joby manufactures its S4 in house through its vertically integrated operations, Archer exclusively outsources its manufacturing process to Stellantis. That partnership could help Archer ramp up its production at a faster clip than Joby. Archer aims to produce 10 aircraft in 2025, 48 aircraft in 2026, 252 aircraft in 2027, and 650 aircraft in 2028. Joby hasn't provided a comparable roadmap yet.

Which company will grow faster over the next few years?

From 2024 to 2027, analysts expect Joby's revenue to jump from $136,000 to $130 million as the FAA certifies its commercial flights in the U.S., it ramps up its flights in Dubai, it delivers more aircraft to the USAF, and it integrates its recent acquisition of Blade Air Mobility's (NASDAQ: BLDE) passenger business.

They expect Archer's revenue to surge from zero in 2024 to $416 million in 2027 as it's also cleared for U.S. flights, delivers more aircraft to the USAF, and launches its air taxi services in Abu Dhabi. Its manufacturing partnership with Stellantis should support that rapid expansion.

Data source: Marketscreener, analysts' estimates.

Nevertheless, Joby and Archer are both expected to stay unprofitable on a generally accepted accounting principles (GAAP) basis for the foreseeable future. Therefore, investors should expect both companies to continue to dilute their investors with more stock offerings and stock-based compensation.

Both stocks are pricey. As of this writing, Joby and Archer trade at 98 times and 15 times, respectively, their projected sales for 2027. Investors might be paying a premium for Joby's technical advantages against Archer, but they could be underestimating Archer's growth potential and its partnership with Stellantis.

So while Joby might initially seem like the stronger eVTOL aircraft maker, investors shouldn't pay the wrong price for the right stock. Instead, I think they should stick with Archer because it's more reasonably valued, operates a less capital-intensive business model, and has presented clearer plans to expand its fledgling business.

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