Archer vs Joby: Which eVTOL Stock Is the Better Buy Today?

The electric vertical take-off and landing (eVTOL) market is in its early stages of growth and an exciting one to watch, as air taxis could revolutionize the way people travel and how cities operate. Two leading companies in the industry working toward certifying their respective aircraft are Archer Aviation (NYSE: ACHR) and Joby Aviation (NYSE: JOBY).

At $3.7 billion in market cap, Archer is far smaller than Joby, whose valuation is north of $7.2 billion. While that's a significant gap, it also comes with heightened expectations; Joby's stock has been falling more significantly of late, as its valuation is coming under a bit more pressure.

Ultimately, both companies have tremendous opportunities and risks. Below, I'll look at which one of these eVTOL stocks might be the better buy right now.

Image source: Getty Images.

The case for Joby Aviation

Investors have been showing more faith in Joby Aviation's business as it conducts test flights, and it's clear to see the progress it's making. Earlier this year, its aircraft flew in both New York and San Francisco, displaying the "operational readiness" of its air taxi.

Last month, the company announced it had finalized an agreement with Delta Air Lines and Virgin Atlantic to launch an air taxi service in the United Kingdom in the future, where customers will be able to book air taxi connections from major airports, including Heathrow, into the city. Joby has announced deals with other companies as it looks to position itself to take advantage of opportunities once they become available in the eVTOL market.

When it last reported earnings in May, the company said it believed it was on track to launch initial operations in 2026 as it continued to make progress toward certification with the FAA. It also reported $2.5 billion in cash and short-term investments as of the end of the quarter, putting it in an excellent financial position to fund its growth.

With key partnerships and agreements in place and Joby demonstrating the viability of its air taxi, it has firmly established itself as a top player in the industry, suggesting that a high valuation for its business is justified.

The case for Archer Aviation

Archer may be far less valuable than Joby, but that doesn't mean that it's significantly behind. It has also been doing test flights; its Midnight aircraft completed a city-to-city flight in California last week, between the Salinas Municipal Airport and the Monterey Regional Airport. It may not be as flashy or as exciting as New York or San Francisco, but it still shows that its aircraft is operational.

As with Joby, Archer has also been securing some exciting deals of its own and has been chosen as the official air taxi provider of the LA28 Games, in what may prove to be the largest showcase yet for the eVTOL industry.

In July, Archer also announced that, through a platform it's been developing with Anduril, a leading military technology company, it has two new autonomous aircraft: Thunder and Halo. The former can be used for defense applications, while the latter can be used for commercial purposes. Both, however, can unlock significant opportunities for Archer.

CEO Adam Goldstein admitted as much when the company released its most recent earnings numbers in May, stating that, "What is clear to me is that Archer is far more than an air taxi company. Our defense and AI software efforts are advancing quickly, and they're opening up an even bigger future for us." With about $1.8 billion in liquidity, Archer's business is also well-funded.

Which eVTOL stock is the better buy today?

There's no denying that both stocks have tremendous growth opportunities. But both will also incur losses for the foreseeable future, and even after obtaining certification and as they scale their operations, cash burn may accelerate.

But Joby trading at such a much higher valuation than Archer doesn't appear warranted at this stage, which is why I believe that Archer is the better overall investment right now. Joby may be the more popular stock among retail investors, which has helped boost its value, but that also sets expectations higher. At a more modest valuation, and with some promising opportunities of its own, Archer looks to be the better eVTOL stock to buy today.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool recommends Delta Air Lines. The Motley Fool has a disclosure policy.