I don’t usually get stunned that often. But when my InvestorPlace colleague Dana Blankenhorn stated that Joby Aviation (NYSE:JOBY) is nothing but hot air until it gets regulatory approval for its business, it made me rethink my own take on JOBY stock.
Referenced from the Book of Ecclesiastes, people through the generations often stated that there’s nothing new under the sun. In that sense, I find it difficult to give a rat’s hind end about YouTube pontificators hyping the latest innovation, especially if they haven’t experienced anything in life. While some details may change, plenty of innovations are merely a quicker way to do something previously forwarded.
Of course, the narrative behind JOBY stock is that this time, it’s different. Certainly, the underlying company’s specialty — electric vertical takeoff and landing (eVTOL) aircraft manufacturing and services — offers plenty of potential. For one thing, they’re quieter than traditional aircraft. Second and more critically, they’re much more environmentally friendly.
As I pointed out in my Joby Aviation research for Benzinga, “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.”
That’s because countries like the U.S. are only attracting more people due to economic opportunities. Congestion will only get worse, meaning that taking advantage of the vertical spacing could help alleviate future gridlock problems.
However, as my colleague bluntly stated, the “business plan is to provide an air taxi service and sell environmental regulatory credits to airlines and other aviation businesses. But until there’s a taxi with authorization to operate from the Federal Aviation Administration (FAA), JOBY stock investors are buying hot air.”
And then there’s that other problem — air mobility has been done before.
JOBY Stock, Part Deux?
On the tarmac, the proposition undergirding JOBY stock is a compelling one. Through its reservation system — hosted on the Uber (NYSE:UBER) app — users can quickly hop from airport to airport, making the total journey much more palatable. At the same time, Blankenhorn warns us that it’s not the first time such a business has been proposed:
Air taxis between airports aren’t new. My dad bought me a ticket on one back in 1965, from Newark to JFK. It was called a helicopter ride. I was 10. (We weren’t rich. He was just extravagant.) It’s just that electric VTOLs are cooler and quieter, thus more flexible — that’s what makes them seem so innovative.
I know exactly what Blankenhorn is talking about because I happen to know some aviation history. So it got me thinking: what caused the air mobility of yesteryear to fail?
While myriad contributory factors exist, it didn’t help that urban mobility solutions caused noise pollution. Actress Katharine Hepburn remarked, “New York is noisy and dangerous enough without this nerve-wracking addition of a luxury trade operating to the distress of many and to the benefit of few.”
That last bit is really the knife that dug into the industry. And as much as I admire JOBY stock, I think Blankenhorn brings up reasonable questions, especially in this age. Mobility in the skies is just asking for societal tensions to explode.
Also, let’s not forget that it may only take one fatal incident to upend JOBY stock and other eVTOL businesses. Oh and by the way, a fatal accident is exactly what stretched people’s patience for urban mobility.
Worth the Risk but Risky It Is
I was completely going to move in a different direction but the discussion of fatal incidents brought to another important point. Yes, airplanes crash all the time but they usually happen in the ocean or in the mountains or somewhere far, far away, in the part of the mind where plausible deniability offers great comfort.
There’s no plausible deniability when a helicopter or eVTOL or whatever comes crashing down in an urban sprawl like New York, Los Angeles, Miami — you name it. Further, with everyone carrying their smartphones all the time, you know that gruesome footage will make its way all over the internet.
Nevertheless, if Joby could develop its eVTOL taxis at scale, the potential for the firm to appeal to the masses could go a long way in supporting JOBY stock. I think the idea truly makes sense but it’s got to make sense for the everyman — not exclusively real estate tycoons.
Ultimately, this is a narrative play. It can go badly — you shouldn’t kid yourself. At the same time, it could be the future of personal transportation. The decision is yours to make.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.