Why Joby Aviation Stock Is Skyrocketing Today

Joby Aviation (NYSE: JOBY) stock is seeing explosive gains in Friday's trading. The flying electric vehicle (EV) specialist's share price was up 18% as of 2 p.m. ET.

Just before the market closed yesterday, Bloomberg published a report stating that the Biden administration was considering a ban on drones using Chinese technology. Joby Aviation stock is surging today because it's possible that regulations that will benefit the company's growth trajectory.

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A ban on Chinese drones and crafts could boost Joby Aviation

According to reports, the Biden administration -- which is in office for about two and a half more weeks -- is weighing a ban on Chinese-made drones and drones that depend on Chinese technologies. If an executive order implementing such a ban does not emerge under Biden's remaining tenure, it's possible that a similar order could be introduced under the incoming Trump administration. If the U.S. government pursues such a move, it could wind up benefiting Joby Aviation.

Joby Aviation is an early leader in the flying EV space and is a U.S.-based company headquartered in California. While the company's flying taxis have used human pilots for test flights, it's likely that they will see remote-piloting and self-driving capabilities introduced in the not-too-distant future. With the U.S. mulling a potential ban on Chinese drone and flying vehicle technologies for security reasons, it's not unreasonable to think that major sources of potential competition for Joby could be taken off the table.

Joby's outlook could be getting a boost on multiple levels

With the company seeking regulatory approvals for its craft and gearing up for commercialization, the removal of some of its biggest sources of potential competition would be a great way to start 2025 for Joby. Competing with Chinese vehicles on pricing has emerged as a major challenge for players in the electric car space, and it stands to be a significant pressure in the flying EV market in the absence of large tariffs or outright bans. Tensions between the U.S. and China are running hot, and the potential for drones and other vehicles to be used as weapons has emerged as an important defense issue.

In addition to potentially bolstering Joby's competitive positioning in the commercial market, reports of a possible ban on Chinese drones and other crafts also highlight the company's growth potential in the defense industry. Interest is rising in flying EVs and hybrid aircrafts, and Joby has a forefront position in an emerging category of vehicles that could see large-scale adoption in the defense industry.

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Keith Noonan 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.