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Why Joby's Recent Earnings Beat Really Doesn't Matter
Key Points
Joby's revenue totaled $55 million last quarter, largely from its Blade passenger business.
The company hasn't obtained approval for its air taxi yet, but it has been making progress.
Joby's bottom line is deep in the red, and that isn't likely to change anytime soon.
Joby Aviation (NYSE:JOBY) posted its latest earnings numbers last week, which have given the stock a bit of a boost. However, since the start of the year, it's still down a whopping 54%.
The reality is that how it does on quarterly earnings reports isn't going to matter all that much anytime soon. That's because the stock is still very much a very long-term play, and it could take a long time before it has any hope of achieving profitability.
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Joby's revenue grew, but it was due to its Blade business
The main reason investors buy shares of Joby is in the hope that it one day becomes a leader in the electric vertical take-off and landing (eVTOL) market. While it's been making progress toward certifying its aircraft with the Federal Aviation Administration (FAA), that hasn't happened yet. That means for the time being, its revenue has to come from other places.
Last year, the company acquired the passenger business from Blade Air Mobility for up to $125 million. And it's that area of its operations that was primarily responsible for the $55 million that Joby generated in its most recent quarter, for the period ending Sept. 30. The results came in better than analyst expectations, and the company also raised its full-year revenue guidance by 15%, now projecting between $135 million and $140 million in revenue.
The diversification is valuable for Joby as it gives it another business unit, which can make it a more appealing option for growth investors. But with a market cap of more than $6 billion, investors will be seeking much more.
The company’s earnings are likely to remain in the red for the foreseeable future
While Joby's revenue may have pleased investors and analysts this past quarter, its bottom line simply doesn't look good at all. The company's operating loss was a staggering $278.1 million during the period -- worse than the $181.7 million it incurred in the same period a year ago.
Losses may even intensify should the company ramp up production of eVTOLs, which are sure to drastically increase its operating expenses. And if the revenue Joby generates from future air taxi flights proves to be underwhelming, the losses could quickly become even more massive than they already are today.
Joby is a risky stock since its gains or losses will depend heavily on the outlook for the air taxi market and the prospect of it obtaining approval for its eVTOLs. Earnings reports may impact the stock in the short term, but in the long run, the bigger story is likely to be the broader eVTOL market, and how well Joby's positioned to succeed in it. Right now, growth investors don't appear to be convinced, hence the stock's downturn this year.
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.