Needham initiates coverage on two air taxi stocks with 'buys'

Long-term investors should take a close look at Joby Aviation and Archer Aviation / Photo: Shutterstock

Two air taxi stocks — Joby Aviation and Archer Aviation — have jumped after the investment bank Needham initiated coverage of them with “buy” ratings, as reported by Barron’s.

Details

On Tuesday, November 19, Needham launched coverage of Joby Aviation and Archer Aviation, rating them “buys.” This led to a nearly 13% jump in Joby stock to $6.33 per share and a more than 16% surge in Archer to $5.13 per share. Whereas Joby dipped in premarket trading today, Wednesday, November 19, Archer extended its gains.

For investors

Joby and Archer develop electric vertical takeoff and landing (eVTOL) aircraft, which are to enable urban air mobility. Recall that Morgan Stanley expects that market to exceed $1 trillion by 2040. Powered by batteries, this new type of aircraft is designed to take off and land vertically, like helicopters, and is capable of carrying up to 12 passengers over distances of about 100 miles (around 161 kilometers).

Air taxi service in the U.S. is expected to be launched in 2028, with the first Federal Aviation Administration (FAA) approvals granted no earlier than 2026, Barron’s notes. Needham acknowledges that it may take years for these stocks to pan out, urging investors to show “patience and some daring.” As Barron’s puts it, they are investments for those “in no hurry to get anywhere.”

Since the beginning of the year, Joby stock has gained just over 2%, while Archer stock is off almost 12%. Barron’s worries that both companies only have a year’s worth of cash. According to the Needham report cited by Barron’s, each firm will need to raise at least another $2 billion in capital at their current burn rates. Today, Joby has a market capitalization of $4.3 billion, while Archer’s stands at $1.88 billion.

In October, Toyota Motors announced an additional $500 million investment in Joby Aviation, bringing its total contributions to almost $900 million. These funds are intended to support certification and commercial production of Joby’s air taxis. In addition, Archer has over $6 billion in indicative orders, with partners including Southwest Airlines, United Airlines, and automaker Stellantis.