How to Buy Joby Aviation (NYSE: JOBY) Stock

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Contributor, Benzinga
Updated: June 20, 2022

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Surrounded by the devastating impact of climate change, both government agencies and commercial enterprises cooperated in recent years to develop clean energy solutions for the transportation sector. Invariably, though, most of the focus centers on electric vehicles since they have largely been proven structurally and economically viable.

But that only addresses one component of personal mobility. Increasingly, global citizens are taking to the air, imposing greater environmental impact. To address this expanding trend, Joby Aviation poses a remarkable solution: an initial public offering (IPO) and subsequent stock offering to fund clean and quiet electric vertical takeoff and landing (eVTOL) aircraft.

When Did Joby Aviation IPO?

Joby Aviation IPO’d on August 11, 2021.

Joby Aviation Financial History

Prior to the San Diego Chargers relocating to Los Angeles, sports radio host Colin Cowherd delivered an impassioned plea that the NFL should step in and keep the Chargers where they were. Cowherd’s argument centered on fundamental economic principles: Port cities are tremendously valuable and thus it makes no business sense to needlessly anger their residents.

The outsized fiscal performance of port cities and major metropolises underlines Joby Aviation’s business strategy. While plenty of room exists in the U.S. for everyone to live comfortably spatially, the overriding reality is that economic catalysts drive people to just a few areas. In turn, congestion will only increase in high-profile cities, to a point where vehicular commuting becomes infeasible.

Therefore, while Joby Aviation is a pre-revenue company — management projects posting its 1st consistent sales in 2024, with positive net income generation in 2026 — it already established itself as the technological leader in air transport mobility. Presently starting small, Joby will likely close 2021 with 2 eVOTL aircraft. By the end of 2026, however, the company expects to command 963, a gargantuan production goal.

According to Wccftech.com, once Joby is fully operational, it will run each of its aircraft for 12 hours daily, with 7 of those hours in the air. In total, management anticipates that the company will lead 12.4 million flights annually, translating to approximately 35,000 flights each day with a load factor of 2.3 passengers per trip and an average trip length of 24 miles.

All told, by December 2026, Joby projects revenue to hit $2 billion. With each aircraft costing around $1.3 million to manufacture, the business could become quite viable if consumer projections hold up.

Unlike a traditional IPO process, Joby Aviation entered the public market via a reverse merger with a special purpose acquisition company (SPAC). Having met the requirements for the business combination agreement, along with earning shareholder approval, Joby Aviation shares and warrants trade on the New York Stock Exchange (NYSE) under the ticker symbol JOBY and JOBY WS.

Prior to the listing date, investors owned equity in Joby Aviation via the SPAC it will combine with Reinvent Technology Partners (NYSE: RTP). A blank-check firm, Reinvent Technology Partners features no underlying business. Instead, its main purpose is to initiate its own IPO to seek out a merger target. Once identified — usually, SPACs have about 2 years to find a willing partner — it then combines with the target, thus taking the private enterprise public.

In a way, you can think of SPACs as a corporate version of a marriage. Following a merger agreement and approval, 2 separate entities become 1, with the target providing the business and the SPAC offering access to the capital markets. Hence, this process represents a backdoor method of going public.

Because SPACs offer a less convoluted pathway to an IPO, smaller enterprises tend to take advantage of this approach. In Joby’s case, the company secured partnerships with both government agencies and blue-chip corporations. However, the eVOTL sector is essentially a frontier market, with both massive upside potential contrasted with huge risks.

Therefore, it’s possible that Joby’s management team decided that the benefits of speed to market and lower costs of marketing exceeded the risks of SPACs, such as shareholder dilution and cash availability drains from early share redemptions.

Joby Aviation Potential

From both environmental and commercial considerations, Joby Aviation’s IPO has tremendously bullish implications. First, according to the Environmental and Energy Study Institute, jet fuel consumption produces carbon dioxide at a fixed ratio of 3.16 kilograms of CO2 per 1 kilogram of fuel, irrespective of the phase of flight.

On a big-picture level, this fixed ratio translates to traditional aircraft contributing 12% of U.S. transportation emissions and accounting for 3% of national greenhouse production, per the Environmental Protection Agency. Potentially, eVOTL could dramatically dent this worrying trend, considering that the federal government estimates commercial aircraft emissions could triple “given the projected growth of passenger air travel and freight.”

Second, for the commercial angle, Joby is well ahead of the competition. It secured a strategic partnership with Toyota (NYSE: TM), resulting in the automaker’s engineers collaborating in manufacturing endeavors. Moreover, Joby received approval from the U.S. Air Force under its Agility Prime program, an initiative seeking to accelerate commercial adoption of fully-electric-powered aircraft.

As well, the eVOTL specialist has been working with the Federal Aviation Administration for many years — critically, much longer than the competition. This close relationship recently gave Joby a clear pathway toward certification to carry passengers, per an article from Bloomberg Businessweek.

That’s not to say risks don’t exist with JOBY stock because they clearly do. As a frontier market participant, the underlying company faces multiple regulatory unknowns. Moreover, cost considerations, along with competition from blue-chip giants like Boeing (NYSE: BA) and Lockheed Martin (NYSE: LMT) will make life eventful.

Still, expert analyses project that Americans over a 17-year period to 2030 will waste $2.8 trillion due to traffic congestion should gridlock trends persist. Ultimately, the magnitude of this problem is what may end up bolstering JOBY stock.

How to Buy Joby (NYSE: JOBY) Stock

Under a traditional IPO process, an entity seeking access to public capital markets hires financial institutions to underwrite their equity shares. What this equates to is that these institutions buy the newly issued shares for the purpose of reselling them to investors.

This resale is a primary market transaction, the first time a company’s stock exchanges hands. While underwriters can technically resell shares to anyone, they choose institutional investors for their higher profitability profile.

Of course, this process leaves out retail buyers in the cold, who must buy new shares on the open market — a secondary transaction. One of the benefits of SPAC-based IPOs, though, is that public investors can participate at any stage, from pre-announcement to post-announcement.

Also, SPACs are just like any other equity unit. If you already know how to buy stocks, you can jump right in. If not, follow the simple steps below.

Step 1: Pick a brokerage.

With the advent of connectivity technologies and rising competition, brokerages today feature several identical incentives such as commission-free trading. Naturally, this lets you pick a platform based on your preferences.

Below is a list of best brokers to consider.

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Step 2: Decide how many shares you want.

Your share count is a vital component of risk management. Choose a balanced number that gives you adequate profitability potential but also limits damage.

Step 3: Choose your order type.

Before placing your bet, review the below market concepts.

  • Bid: The highest price a buyer will extend, the bid is always lower than the ask.
  • Ask: The lowest price a seller will take, the ask is always higher than the bid.
  • Spread: Representing the variance between the bid and ask, the spread also signals market liquidity and risk. Narrower spreads imply higher liquidity and lower risk, while the opposite is true for wider spreads.
  • Limit order: Limit orders are transaction requests at specific prices, offering price transparency but no execution guarantees.
  • Market order: Conversely, market orders guarantee fulfillment but at the prevailing rate, which constantly fluctuates.
  • Stop-loss order: A protective mechanism, a stop-loss order automatically exits your position at either a predetermined price or lower.
  • Stop-limit order: In contrast, stop-limit orders only execute at a predetermined rate, eliminating price ambiguities. Beware that such orders carry the same nonfulfillment risk as limit orders.

Step 4: Execute your trade. 

To execute a market order, follow these steps:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Follow the same sequence for limit orders (but include your execution price).

Fly the Friendly Skies Cleanly This Time

While a personal air mobility network might seem like science fiction, Joby Aviation is turning fantasy into reality thanks to groundbreaking technical acumen and a potentially viable business model. Though industries on innovation’s cutting edge are inherently risky, the consequences of imposing the status quo are far greater, thus bolstering the speculative appeal of JOBY stock.

Frequently Asked Questions

Q

Who is the CEO of JOBY?

A

JoeBen Bevirt is the founder and CEO of JOBY.

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