Is Joby Aviation Stock a Buy?

The auto ridesharing market has become one of the most important tech advancements of the last 15 years, enabling new jobs and an entirely new way to get around cities around the world. The same kind of disruption may be coming for the aviation market, led by Joby Aviation (NYSE: JOBY) and its electric aircraft.

It's not a business without risks, given the nascent state of the industry, but Joby has the technology to be a major player in the market.

Getting off the ground

The first step for Joby is building and testing aircraft that will be able to provide the air taxi service the company envisions. Three production prototype aircraft have been built and the certification plans are progressing. Just this week, the FAA released operational rules and pilot training requirements for what it calls "powered-lift aircraft" like Joby's.

The UAE also certified Joby to be the first electric air taxi in the world, paving the way for a service to launch as early as next year.

As these milestones pass, the company needs to ramp up production of aircraft to meet the potential increase in demand.

Scaling is ahead

As Joby gets closer to certification, the company is building out production capacity to scale the business. Earlier this month, Toyota announced a $500 million investment in the company "to support the certification and commercial production of Joby's electric air taxi, with the aim of realizing the two companies' shared vision of air mobility."

Management said the company will reach production of one aircraft per month by the end of 2024. From there, if demand exists the business can scale further.

Autonomy could be the future

If the air taxi business is going to truly scale globally, it will need lots of pilots. Or technology that could replace pilots. That's where Joby's acquisition of the autonomy division of Xwing could play a role in the company's future.

If Joby can scale production efficiently and operate without a pilot this could be a compelling value for high-end travelers. And the air taxi between airports and city centers in large metropolitan areas may just be the start.

A recent demonstration flew 561 miles, so the range of Joby aircraft could be between cities all around the world.

Taking a flier on Joby

To be clear, there's a lot Joby needs to do to become a viable business. The company is still pre-revenue and is burning through cash quickly, as you can see below.

JOBY Revenue (TTM) data by YCharts

However, this could be a valuable service to provide if it can reach scale and lower costs sufficiently.

It's hard to judge what the market will be worth, but Market Research Future puts the market at $10 billion in revenue by 2032. If that happens, Joby could have a long growth runway ahead.

I think Joby is an intriguing buy as a speculative part of a well-balanced portfolio. But understand that it's both high risk and high reward.

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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.