Key Points
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Joby’s aircraft can transport just four passengers and a pilot.
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The company will need to significantly scale its operations to have much of an impact in busy cities.
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Last year, it incurred a $930 million loss.
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Joby Aviation (NYSE: JOBY) recently conducted a piloted air taxi flight in San Francisco, showcasing the capabilities of its aircraft, in hopes of convincing investors it is the real deal in the emerging electric vertical take-off and landing (eVTOL) market. While the stock soared 62% last year, there’s been far less excitement in 2026, with its share price down by 34% as of Monday’s close.
The business has significant potential, especially if its air taxis can truly alleviate traffic in congested cities while also giving people a unique way to travel. To get to that stage, however, it won’t be easy and requires not only regulatory approval but also the company scaling its operations significantly. Here’s why I’m skeptical of that.
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There are still too many question marks around Joby and the entire industry these days
Joby’s air taxi can carry four passengers and a single pilot. That means to really have a significant impact on congestion in a busy city, there might need to be hundreds, possibly thousands, of these air taxis flying around. But even having a hundred of them could be problematic in an increasingly crowded airspace, which can make air traffic controllers’ jobs that much more complicated. Even if they are away from airports, it still begs the question: who will monitor the skies to ensure safety?
Then there’s also the issue of what it might cost Joby to manufacture these air taxis at scale. This is a capital-intensive business, and building a fleet of air taxis can be incredibly costly. Consider that over the past year, Joby has incurred a $930 million loss. If it starts increasing air taxi operations at a massive scale, its costs could become significantly higher, leading to larger losses and significant cash burn, likely resulting in stock offerings along the way that would dilute its shareholders.
The market may have gotten ahead of itself with Joby’s stock
Joby’s stock has a market cap of $8.5 billion, and that’s despite it declining sharply this year. It highlights just how overly bullish many investors have been on the business, whose business model remains unproven and full of question marks.
I’m skeptical not only of Joby but also of the entire eVTOL industry. While air taxis may end up flying in busy cities, they may serve more of a niche market and be novelties, rather than the mass-produced machines they’ll need to be to make a stock like Joby be worth its hefty valuation. That’s why I think taking a wait-and-see approach with the eVTOL stock remains the safest option for investors right now.
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David Jagielski, CPA 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
