Joby Aviation Could Deliver 10x Returns for Patient Investors

A stock that grows 10 times its original value -- a 900% increase -- is something most investors would be happy to have in their portfolios. But it rarely happens in one sudden leap, if it even happens at all, with most eventual 10-baggers needing several years to decades to deliver a tenfold gain to those who patiently hold on.

Could Joby Aviation (NYSE: JOBY), the air taxi company, be one of these tenfold winners?

Image source: Joby Aviation.

The long flight to 10

Joby Aviation is making electric air taxis, also called electric vertical takeoff and landing (eVTOL) aircraft.

If you've never heard of or seen an eVTOL, that's because this type of aircraft hasn't been approved for commercial operations in the U.S. But if they are approved, well, buckle up -- not only could your daily commute look different (from the air, that is), but the skies above cities could have fewer helicopters and more of these quiet, electric, drone-like vessels whizzing to and fro.

The eVTOL market is expected to account for a sizable share of the global economy, with Morgan Stanley once predicting a total addressable market of a trillion by 2050.

That brings us to Joby: What makes Joby so exciting is that it is the frontrunner of this nascent market. I mean that literally: Joby has logged more than 50,000 flight miles, and its aircraft is now in the fifth and final stage of FAA type certification. It earns revenue through its passenger helicopter business, Blade, and it is also working with Toyota (NYSE: TM) to lay the groundwork for producing air taxis at scale.

All this is to say: If the eVTOL industry becomes the billion-dollar market analysts are predicting, then Joby would be its most obvious beneficiary.

But would it be enough to make Joby a 10-bagger?

At the time of writing, Sept. 10, Joby had a market cap of roughly $6.4 billion. A tenfold gain would bring that market cap up to about $64 billion, assuming the share count stayed the same, which would imply about $14 billion in annual revenue if its price-to-earnings multiple were 30 and its net margins were 15%. Put differently: If every Joby eVTOL aircraft were earning $2 million annually, then it would need a fleet of 7,500 aircraft to rake in $15 billion a year.

Those are lofty numbers, requiring aggressive growth. If Joby were to make 1,000 eVTOL vehicles annually, it would have 7,500 in 7.5 years -- 15 years if it were to produce 500 annually. Right now, Joby has built five aircraft, with 12 more in production.

So yes, Joby could grow into a $64 billion market cap -- though getting there will take years of expansion. Indeed, a tenfold return, if it ever comes, will need time, possibly a decade or longer. That could be a long flight if you need your money sooner -- not a flight every investor can take, at any rate. Given Joby's speculative nature right now, I would only invest if you have the time horizon to see it grow; otherwise, there are plenty of other great opportunities that require less patience and fewer leaps of faith.

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