Archer vs Joby: What's the Better eVTOL Stock to Buy Right Now?

Flying taxis could soon be a new way for travelers to get around busy cities. Joby Aviation (NYSE:JOBY) and Archer Aviation (NYSE:ACHR) are two leading electric vertical take-off and landing (eVTOL) companies that are getting close to obtaining approval for their respective aircraft and could soon be transporting passengers.

Investors, however, may nonetheless be disappointed that it hasn't happened yet. Meanwhile, the companies continue to burn through cash. They are risky investments, but both possess a lot of growth potential in the long run.

Joby has lost more than 60% of its value this year, while shares of Archer are down by close to 50%. But at more modest valuations, now may be a better opportunity for investors to buy one of these stocks. Below, I'll look at which one may be the better buy.

Which company is in a better cash position?

For a business that's not profitable, an important thing for investors to consider is how much cash it has on hand, and just how much it's burning through. This can provide valuable insight into which one may be in greater need of raising cash in the future and thus pose the greater dilution risk.

Here were the key numbers from their recent financials, for the period ending June 30:

• Archer Aviation: $1.6 billion in cash and short-term investments, and $305.5 million used up from its day-to-day operations over the past six months.
• Joby Aviation: $2.3 billion in cash and short-term investments, and $317.6 million used up from day-to-day operations in the past six months.

Both companies are burning through a comparable amount of cash, but with Joby having more near-term assets on its books, it may be less in need of cash than Archer. However, that doesn't mean Joby won't need to raise funds, but it may just require a smaller cash infusion.

Joby generated nearly $40 million in revenue last quarter

Neither of these businesses is profitable, and that's not likely to change anytime soon. But Joby is already generating a fair amount of revenue after acquiring Blade Air Mobility's passenger business last year, an aviation company that offers helicopter, seaplane, and private jet flights. This business was a major reason Joby generated $38.6 million in revenue in its most recent quarter.

However, ultimately, both businesses remain deeply unprofitable, with Joby's net loss totaling $245 million during the quarter and Archer posting a loss of $263 million. The revenue they generate is limited relative to the expenses they incur, and that's unlikely to change until their air taxis receive approval and begin commercial operations.

Archer’s valuation remains lower

There are many similarities between these two eVTOL stocks, although retail investors have generally been more bullish on Joby in the past, believing that it may be closer to attaining the necessary FAA certification from regulators.

At $4.7 billion in market cap, Joby's valuation is still considerably higher than Archer's, whose valuation is around $3.1 billion.

Both are highly risky, but I'd go with Archer

If Joby and Archer obtain FAA certification for their respective aircraft, both of these stocks could skyrocket in a hurry. There are a lot of similarities between the two companies, but what tips the scales for me is the more modest valuation for Archer, which is why it's the stock I'd go with. I don't believe that Joby has done enough to show that its business should be so much more valuable than Archer's.

However, for investors who are brave enough to consider buying either one of these struggling stocks, they'll need a lot of patience, because even if FAA certification does come, it could still be a long road ahead before either of these companies gets out of the red. In the meantime, both stocks are likely to remain highly volatile.

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.