This Beaten-Down Aviation Stock Is Worth a Look Despite Its 46% Decline

If you've been holding out on Joby Aviation (NYSE: JOBY), whether because of its lofty valuation or unfinished certification process, now might be a good time to take a second look at the beaten-down aviation stock.

Over the past month, Joby stock has lost about 21% of its value; year to date, about 47% has been shaved off. The company now has a $7.5 billion market capitalization, which still isn't cheap considering it could be years away from generating meaningful revenue.

Joby's steep, not to say vertical, decline isn't all that surprising. In fact, even the most bullish forecasts for the nascent electric vertical takeoff and landing (eVTOL) market have warned investors not to get too hung up on a slow regulatory process.

At today's price, I think Joby is looking like a long-term buy, and it's for similar reasons that investors are currently shying away from it.

Joby Aviation is moving forward, even if the stock is moving backward

In a nutshell, Joby Aviation is trying to build the first real air-taxi company in the U.S.

To that end, the company has more real-world proof than most of its eVTOL peers. It has logged tens of thousands of miles across its eVTOL fleet, is currently testing its FAA-conforming aircraft in preparation for Type Inspection Authorization (TIA), and has begun preparatory work with its partner Toyota Motor (NYSE: TM) to begin commercial production.

Image source: Joby Aviation.

Joby has also partnered with Delta Air Lines and Uber Technologies, acquired Blade Air Mobility's passenger business, and is participating in a White House-backed eVTOL program, which could give it an opportunity to begin early operations in some states before the end of this year.

And yet the stock sinks. Not all that surprising, to be honest. Hype over Joby reached a fever pitch last year, when it and its rival Archer Aviation became two of the market's hottest speculative stocks, fueled by growing enthusiasm for flying cars and the prospect of future commercial launches.

Commercial launches are, to be sure, moving forward, just not as quickly as some bullish investors might have hoped. Its progress, nevertheless, is consistent with Morgan Stanley's long-standing warning that eVTOL technology would likely advance faster than the regulatory framework needed to commercialize it. As Morgan Stanley notes: "[W]e would encourage great patience in the early years as the hurdles of certification are also likely underestimated."

In 2021, Morgan Stanley predicted that the global urban air mobility market could reach $1 trillion by 2040 and $9 trillion by 2050 in its base-case scenario (its bullish case sees the market at about $19 trillion by 2050). If Joby captured even a sliver of that market, its revenue growth could be enormous.

Is Joby Aviation stock a buy?

Wall Street seems to be dumping Joby because certification is taking time, but I think the slow progress was always a part of even the most bullish thesis. That, to me, is what makes Joby a compelling stock. Nothing has changed negatively for its business; indeed, its prospects have improved.

For aggressive investors with a long-term time horizon, Joby's progress makes it increasingly interesting. I would certainly treat it as a speculative play, but one that could deliver monster gains over the long run.

Steven Porrello has positions in Archer Aviation and Joby Aviation. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.