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Uber-backed Joby Aviation IPO fails to take off

Joby Aviation did not meet its fund-raising target in the initial offering while the industry is facing a lot of challenges. That said, some see a future for flying taxis.

When the news broke that electric vertical takeoff and landing (eVTOL) aircraft manufacturer, Joby Aviation [JOBY] was seeking to list on the New York Stock Exchange (NYSE) on February 24, shares in Uber Technologies [UBER] fell 10.9%. The ride-hailing firm has held a stake in Joby ever since the startup took over its flying taxi unit, Elevate, in December 2020.

Joby Aviation debuted via a merger with SPAC Reinvent Technology Partners [RTP], the share price of which has fluctuated significantly in the run-up to its IPO on August 11. Having traded just below $10 since mid-April, the stock spiked to $10.50 on August 9. Shares in Reinvent Technology Partners then flatlined at $10.03, with 62% of shareholders cashing in ahead of the IPO. Dwindling enthusiasm for SPAC mergers is thought to have instigated the redemptions.

Since listing on the NYSE, the Joby Aviation share price has fallen 30.7% from $13.40 on August 11 to $9.29 on August 17.

30.7%
JOBY AVIATION'S SHARE PRICE FALL SINCE LISTING ON THE NYSE

NAVIGATING A CROWDED SPACE

Joby was hoping to raise $1.6 billion from the listing, with ambitious projections pitched to potential investors to justify a circa $6.6 billion valuation. These included becoming profitable, with a target of $2 billion revenue by 2026 and $20 billion in revenue by 2031. Reinvent Technology Partners’ founders’ shares will only fully vest when Joby’s share price tops $50, implying a $30 billion market cap.

In the end, the Reinvent Technology Partners redemptions ahead of the listing meant the figure raised was around $500 million less than had been hoped at $1.1 billion, giving Joby a valuation of $4.5 billion.

By comparison, fellow eVTOL startup, Archer Aviation, recently had its pre-IPO valuation slashed by Atlas Crest - the SPAC it is proposed to merge with - from $2.7 billion to $1.7 billion. Tesla [TSLA], which had a product live at the point of its IPO, took 10 years since its IPO to record a full-year profit. Ride-hailing firms Uber and Lyft [LYFT] are yet to do so, despite 2019 IPO valuations of $75 billion and $20.6 billion, respectively.

Asad Hussain, senior analyst in mobility technology at PitchBook, told TechCrunch that raising significant capital to navigate the certification process is a key factor in the success of eVTOL companies. “There’s over 100 startups in the space. Not all of them are going to be able to do that.”

'OUR GENERATION'S MOONSHOT MOMENT' 

JoeBen Bevirt, founder and CEO of Joby, was upbeat about the $1.1 billion raised. He said that this figure, combined with Joby’s $500m cash reserves, is everything he needs to get his aircraft design off the ground and signed off by regulators by 2023.

“By taking Joby public we have the opportunity to drive a renaissance in aviation, making the emissions-free flight a part of everyday life,” said Bevirt. “This is our generation's moonshot moment, and at Joby we're proud to be leaning in.”

“By taking Joby public we have the opportunity to drive a renaissance in aviation, making the emissions-free flight a part of everyday life.”
- JoeBen Bevirt, founder & CEO of Joby

SPECULATION IS BECOMING REALITY 

Joby and Archer are joined by a clutch of eVTOL hopefuls, with Honeywell International [HON], a manufacturer of parts for flying taxis, estimating the market’s value to reach $120 billion by 2030 and Morgan Stanley tipping it to rise as high as $1 trillion, by 2040.

German startup Volocopter completed the first-ever crewed test flight of an eVTOL in the US. Its Volocopter 2X model flew for four minutes at 160ft and achieved a top speed of 18mph.

Vertical Aerospace recently announced a partnership with Virgin Atlantic to launch a fleet of between 50 and 150 eVTOLs in the UK as soon as 2024. Vertical Aerospace’s VA-X4 model is capable of travelling the 56 miles from Heathrow to Cambridge in 22 minutes.

“We believe we are at the front edge of a transport revolution. Some people who are plugged in can see what’s coming, but the vast majority of us cannot.”
- Jim Atkinson, CEO & founder of SmartETFs

BEYOND SCIENCE FICTION 

Jim Atkinson, CEO and founder of SmartETFs, sees a big future in eVTOLs. “We believe we are at the front edge of a transport revolution,” he said in 2019. “Some people who are plugged in can see what’s coming, but the vast majority of us cannot.”

His mobility fund, the Smart Transportation & Technology ETF [MOTO], is up 12% in the year to date. The fund’s holdings are still mostly dominated by electric and autonomous vehicles. As of August 16, it does not hold Joby’s stock, so has not immediately taken advantage of one of the first eVTOL providers coming to the market. But based on his comments in 2019, that may soon change.

“I always bring up the flying taxi, and the reaction is ‘oh, that’s just science fiction, that’s 'The Jetsons',’” he said. “[But] the technical challenges are... considerably less than those for a self-driving car: a cat’s not going to jump out in front of your flying taxi.”

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