Air taxi maker Joby receives tranche from Toyota, shares gain 29% in a day

Quotes on air taxi maker Joby Aviation surged almost 29% yesterday, May 28, after the company announced it had received half of a previously agreed $500 million investment from Toyota. The Motley Fool says that even though the funding itself was not unexpected, the news sparked investor enthusiasm around the stock and its relationship with the iconic automaker — especially amid attacks on its main peer, Archer Aviation.

Yesterday, Joby advanced almost 29% on the New York Stock Exchange to close at $8.86 per share, its highest closing price since January 21, before giving back almost 3% in premarket trading today, as of this writing.

The rally was driven by news that the air taxi manufacturer had received a $250 million investment from automaker Toyota to support certification and commercial production of Joby aircraft. This investment also brings the companies closer to a strategic manufacturing alliance, according to the press release.

“The news comes on the heels of a damning report on its closest peer, Archer Aviation, that alleges Archer is misleading investors regarding its development timeline and aircraft capabilities,” the Motley Fool notes. The short-selling firm Culper Research claimed Archer had “systematically misled, deceived, or outright lied” to investors over the past 12 months about practically every milestone of its Midnight eVTOL aircraft’s development and testing. The Motley Fool believes that if these allegations are proven true, Joby could gain a significant edge in the race to achieve commercial operations.

Joby is developing eVTOL aircraft that it hopes to sell worldwide.

The company already has more than $17 billion in preorders, which makes it the leader in the air taxi sector, according to Sergey Glinyanov, a senior analyst at Freedom Finance Global. However, Joby can begin commercial flights only once it receives certification from the U.S. Federal Aviation Administration (FAA). The company is currently at the second-to-last stage of the certification process, as it noted in a shareholder letter released in May. The final stages of certification include FAA-supervised flight testing.

In October, Joby announced it had secured a $500 million strategic investment from Toyota in exchange for shares, with Toyota’s total investment in the air taxi manufacturer rising to $894 million.

Air taxis could replace trips that take 60-90 minutes on the ground with flights of 5-10 minutes, claims Archer founder and CEO Adam Goldstein. JPMorgan notes helicopters currently perform this role. However, they are noisy, which limits the number that can be in the air. eVTOL aircraft are quieter and more environmentally friendly. JPMorgan sees the eVTOL market reaching $1 trillion by 2040 and $3 trillion when including cargo and military operations. For context, Kings Research valued the global air taxi market at just $3.68 billion in 2023.

Joby stock is up almost 9% for the year to date and more than 84% over the last 12 months. In November, the investment bank Needham spotlighted Joby as one of two preferred air taxi stocks, the other being Archer.

This year, two other analysts — from JPMorgan and Morgan Stanley — have downgraded their recommendations on Joby, according to Yahoo Finance. JPMorgan changed its rating from “hold” to “sell.” The stock was seen as rising too quickly. According to JPMorgan analyst Bill Peterson, as quoted by Barron’s, it was trading as if FAA type certification had already been completed.

According to Airline Economics, Morgan Stanley changed its rating from “overweight” to “equal-weight” because of uncertainty related to tariffs.

According to MarketWatch, Joby has four “buy” ratings, three “holds,” and two “sells,” with an average target price of $7.75 per share, below the current market price.