Evtol Sector breakdown:
A new chapter is unfolding in the realm of aviation—one that marries the carbon-reducing potential of electrification with the nimbleness of vertical takeoff and landing. Enter the eVTOL (electric vertical takeoff and landing) aircraft, a futuristic innovation poised to revolutionize transportation, emergency response, and urban mobility.
The flying car, or vertical aviation, market is one of the fastest-growing segments of the transportation industry. Analysts and market enthusiasts predict that eVTOL stocks could potentially transform urban mobility and create a multi-billion-dollar market. With sufficient investment and consumer interest, this nascent sector could become a formidable force, akin to the explosive growth of the electric vehicle (EV) market over the past decade.
As eVTOL technology advances, we can anticipate more breakthroughs, collaborations, and practical applications. From low-cost vertiports to sophisticated air mobility initiatives, the sky is the limit for these electric marvels.
However, hype is the name of the game in electric aviation. Over the years, numerous companies have emerged with bold claims of imminent large-scale electric aircraft production. Investors, lured by these promises, provide funding, only to face disappointment when prototypes fail to meet expectations. Promises turn into apologies, and investors retreat after getting burned.
Electric aircraft remain impractical primarily because batteries are too heavy for the energy they deliver. The low energy density of batteries poses a significant challenge, as aircraft require substantial energy for takeoff and cruising. Energy density, typically expressed in Watt-hours per kilogram (Wh/kg), is a critical metric. While individual lithium-ion batteries can achieve around 300 Wh/kg, the effective energy density of operating battery packs is lower due to packing factors and cooling requirements.
It is essential to remember that we are not aviation specialists but traders and researchers who navigate market trends and seek the best opportunities by analyzing all available data.
Members overview
This is a list of stocks that members asked us to do extra research on none of these are alerts/buy/sell recommendations.
Company: Blade Air Mobility
Quote: $BLDE
BT: Blade was once a darling among investors during the SPAC frenzy, but like many other stocks, its shares have fallen out of favor. Unlike numerous other SPAC companies, Blade has consistently generated revenue and possesses a viable business model. Two years ago, the company made a pivotal shift, which we’ll delve into shortly, transforming itself and steering towards profitability. Despite its recent struggles, we’ve always viewed Blade as a promising bet on the future of mobility. The daily increase in trading volume indicates a shifting sentiment towards the company. Presently, Blade’s market capitalization stands at a modest $200 million, with a revenue estimate projected to reach $250 million in 2024.
The key point for investors to note is that Blade Air Mobility appears undervalued at its current price, given its market capitalization of only $200 million. The company is strategically positioned to tap into a significant opportunity in air taxi services, particularly with the emergence of new aircraft.
Blade is scheduled to report its earnings next week, and we will be closely monitoring the results for any potential opportunities that may arise based on the outcome.
ST: $6-$8 (2024 target)
Description: Blade Air Mobility, Inc. provides air transportation alternatives to the congested ground routes in the United States. It provides its services through charter and by-the-seat flights using helicopters, jets, turboprops, and amphibious seaplanes. The company was founded in 2014 and is headquartered in New York, New York.
Short Interest:
Short Percent of Float 8.01 %
Short % Increase / Decrease 27 %
Like many former SPACs, Blade Air Mobility has significantly expanded its business in recent years, yet its stock continues to trade near all-time lows. Despite the company’s aggressive growth efforts, investors were disappointed with the guidance, although the stock isn’t necessarily trading based on growth expectations.
Blade Air Mobility operates a unique business model, with most costs passed through and experiencing some fluctuations. Although the company reported strong growth in 2023, the market is expressing concerns about revenue and EBITDA profit guidance for the next two years.
In Q4 ’23, the company saw a 24.5% increase in revenues to $47.5 million. Additionally, the flight margin expanded to 19.0% during the seasonally slow quarter, up from 14.3% in the previous Q4.
Blade’s substantial growth in recent years stems from expanding its existing operations post-acquisitions, especially in the medical market, and reopening businesses after Covid-19 shutdowns. However, the short-distance market’s growth potential is limited due to the current reliance on helicopters and restricted flight operations.
Interestingly, a significant portion of that revenue, $99 million or 44%, came from transporting vital organs such as hearts, livers, and lungs across the country. This segment has made Blade the largest dedicated air transporter of human organs in the United States. While Blade is known for its premium transportation services, a significant portion of its business revolves around emergency medical transport.
Blade’s core business encounters a seasonality challenge, as highlighted in its 2023 investor presentation. Revenue from passenger flights and flight margins typically peak during the summer months, whereas demand for medical transport remains consistent regardless of weather conditions.
The organ-transplant segment of Blade’s business is experiencing rapid growth compared to other sectors. Revenue from medical transport increased by 48% year-over-year in the fourth quarter of 2023, while short-distance passenger flights saw a 14% increase, and jet/other revenue declined by 32%. This trend indicates the growing importance and profitability of Blade’s medical transportation operations.
Citigroup Maintains Buy on Blade Air Mobility, Lowers Price Target to $8
Credit Suisse Maintains Outperform on Blade Air Mobility, Lowers Price Target to $7
JP Morgan Maintains Overweight on Blade Air Mobility, Lowers Price Target to $5
Company: Lilium N.V
Quote: $LILM
ST: $2 if they stay alive
Lilium, a company we’ve monitored since its 2021 debut as a SPAC, initially caught our eye with its sleek vehicle design. Lilium, Transcend Air Corporation, and Joby Aviation all boast modular designs for their three-part structures—landing pads, parking bays, and terminals—that can be arranged and scaled according to need and space. However, we have refrained from investing in Lilium due to the inherent risks and our already substantial allocation to SPACs.
Three years into its public journey, Lilium has yet to make significant progress. This is not to disparage their efforts over the years, but the results have yet to materialize in revenue terms.
Moreover, in January 2020, an aeronautical engineer published an article asserting that the Lilium aircraft would deplete its battery in a mere 68 seconds of hovering. The analysis further suggested that one minute of VTOL time would drain the battery enough for only 11 miles, or four minutes of cruising at 185 mph.
While the accuracy of this analysis remains uncertain, Lilium has yet to fulfill its SPAC promises, lending some credence to these concerns. At this juncture, we would advise against investing in this stock until meaningful catalysts present themselves.
Description: Lilium N.V. engages in the research and development of electric vertical takeoff and landing aircrafts and jet for use in high-speed air transport system for people and goods. It also provides aircraft manufacturer services, including training services, maintenance operations, material management and global distribution, flight operations support, ground service equipment, and digital solutions. The company was founded in 2015 and is headquartered in Gauting, Germany.
Short Interest:
Short Percent of Float 7.43 %
Short % Increase / Decrease 16 %
The Lilium Jet, a seven-seater marvel, is projected to achieve a cruise speed of 280 km/h (175 mph) and a range exceeding 250 km (155 miles), with a cruising altitude of 3,000 meters (10,000 feet). The company anticipates that this range will increase as battery density improves. The maximum takeoff weight of the aircraft is estimated to be 3,175 kg (7,000 lb).
Lilium’s production timeline for its seven-seat electric jet begins in 2023, with an initial batch of 25 units. The company aims to ramp up production to 250 aircraft in 2024 and 400 aircraft in 2025. Additionally, Lilium has ambitious plans to manufacture a 16-seat eVTOL jet by 2027 and a 50-seat eVTOL jet by 2030.
Recent Accomplishments
Lilium has recently marked several significant milestones:
Design Organizational Approval: Achieved Design Organizational Approval from the European Union Aviation Safety Agency (EASA), positioning Lilium as the world’s first company eligible for a full type-certificate for aircraft certified under EASA’s SC-VTOL rules.
Assembly of Full-Scale Lilium Jet: Commenced the assembly of the first full-scale Lilium Jet at the company’s production facilities.
Strategic Cooperation with Lufthansa: Formalized a Memorandum of Understanding (MoU) for strategic cooperation with Lufthansa to jointly explore holistic eVTOL opportunities.
Extended Partnership with Inobat: Advanced its partnership with Inobat to prepare for high-volume battery cell production, confirming Lilium’s multiple-sourcing strategy.
Aftermarket Service Business: Established the eVTOL industry’s first aftermarket service business, Lilium POWER-ON. This initiative is projected to generate at least $5 billion in recurring revenue by 2035, with strategic partnerships already in place for aircraft spares, maintenance, repair, and fast charging solutions.
Funding and Customer Payments: In 2023, Lilium secured significant funding, raising $292 million to sustain aircraft development. The company also received its first customer pre-delivery payments for the Lilium Jet ahead of schedule.
Simplicity is a cornerstone of Lilium’s design philosophy. By minimizing complexity, the company aims to reduce manufacturing and maintenance costs, enhance safety, increase affordability, reduce weight, and boost efficiency. As Lilium succinctly states, every component left out of the aircraft translates to less development and maintenance required. Here are key elements underscoring the simplicity of the Lilium Jet eVTOL aircraft:
No folding propellers or wings
No tail
No rudder
No propellers
No gearboxes
No tilting wings
No water cooling
No liquids (petroleum fuel or oil)
No single point of failure (e.g., an aircraft with one engine, like a Cessna 150, has a single point of failure if that engine fails)
Wings provide greater efficiency for forward flight
Each electric motor has one moving part
36 ducted fans provide ultra-redundancy
Canaccord Genuity Maintains Buy on Lilium, Lowers Price Target to $2
Citigroup Maintains Neutral on Lilium, Raises Price Target to $1.1
B. Riley Securities Initiates Coverage On Lilium with Buy Rating, Announces Price Target of $3
Company: Surf Air Mobility
Quote: $SRFM
Surf Air, founded in 2011, has experimented with various business models. It began as a subscription service before operating eight-passenger turboprops. In 2018, it ventured into the blockchain realm with a loyalty program dubbed “Voy.”
In its latest iteration, Surf Air has forged partnerships, notably with big data titan Palantir. As part of this strategy, it is acquiring Southern Airways Express, a commuter airline servicing 46 cities with 250 daily departures.
Surf Air is another eVTOL name we’ve observed since its listing in mid-2022. This listing followed a rushed IPO, after a failed SPAC attempt the previous year, which appeared to be an avenue for insiders to exit. Despite pushing a merger with another airline, the venture has not yet proven successful, as evidenced by the stock’s near-penny status. This is peculiar because, unlike other eVTOL names, Surf Air generates quarterly revenue. Nevertheless, Wall Street remains unconvinced. For us, this name seems far from primetime, which is why we have refrained from investing in the stock.
ST: $1
Description: Surf Air Mobility Inc. operates as an electric aviation and air travel company in the United States. The company offers an air mobility platform with scheduled routes and on demand charter flights operated by third parties. Surf Air Mobility Inc. is headquartered in Hawthorne, California.
Short Interest:
Short Percent of Float 1.95 %
Short % Increase / Decrease -1 %
Surf Air Mobility, currently developing a hybrid-electric powertrain for aircraft and a digital marketplace for Regional Air Mobility (RAM), aims to meet the unfulfilled demands in this sector.
An analyst noted the potential for significant market opportunities, projecting an addressable market for RAM worth $12-18 billion by 2035, driven by technological advancements.
However, concerns over the company’s financial structure prompted a downgrade. Surf Air Mobility is burning through funds at a rate of $16-18 million per quarter, while its cash balance hovers in the single digits. Despite having access to committed financing through the GEM facility, which allows for $90 million in committed draws and potentially up to $296 million in follow-on draws, the risk of substantial dilution remains high, especially given the stock’s recent performance.
The company’s strategy involves retrofitting existing aircraft frames with new technology to expedite the product’s market entry. This approach is part of a broader effort to secure a foothold in the emerging RAM industry, which is expected to expand in the coming years.
As of the end of the first quarter of 2024, Surf Air Mobility retains the option to draw upon the substantial financial resources provided by the GEM facility.
Fourth Quarter 2023 Financial Performance
GAAP Revenue and Pro Forma Revenue: Surf Air reported GAAP revenue of $26.8 million and pro forma revenue of $27.4 million for the fourth quarter of 2023, a slight decline from $27.7 million for the same period the previous year.
Net Loss: The GAAP net loss for the fourth quarter of 2023 was $(110.5) million, significantly widening from $(23.8) million in the prior year. This loss includes investments in R&D for electrification and software technology, stock-based compensation, impairments, transaction costs, and other non-recurring items. The pro forma net loss was $(107.4) million, compared to $(19.4) million the previous year, reflecting similar expenses.
Pro Forma Adjusted EBITDA: The pro forma adjusted EBITDA for the fourth quarter of 2023 stood at $(18.4) million, down from $(12.6) million for the same period in the prior year.
Full Year 2023 Financial Highlights
Revenue: Surf Air achieved GAAP revenue of $60.5 million and pro forma revenue of $112.9 million for the full year 2023, surpassing the year’s guidance.
Net Loss: The GAAP net loss for 2023 was $(250.7) million, compared to $(74.4) million the previous year. This includes substantial investments in R&D, stock-based compensation, impairments, transaction costs, and other non-recurring items. The pro forma net loss was $(185.0) million, compared to $(91.5) million the prior year, reflecting similar expenses.
Pro Forma Adjusted EBITDA: The pro forma adjusted EBITDA for 2023 was $(50.9) million, compared to $(49.4) million the previous year, meeting the 2023 guidance.
First Quarter 2024 Financial Outlook
Revenue: The company anticipates revenue between $28.5 million and $29.5 million.
Pro Forma Adjusted EBITDA: Expected to be between $(17.0) million and $(14.0) million, excluding the impact of stock-based compensation, changes in the fair value of financial instruments, and other non-recurring items.
Technology and Market Position
The company attributes recent delays to limitations in current technology, with key system components not yet certified. Despite this, Surf Air remains confident it will be the first to market with an electric commercial airplane. The delay contributed to Surf Air’s $251 million loss in 2023, although significant revenue growth was achieved compared to the previous year.
Bernstein Downgrades Surf Air Mobility to Market Perform, Lowers Price Target to $0.4
Canaccord Genuity Downgrades Surf Air Mobility to Hold, Lowers Price Target to $1
Canaccord Genuity Maintains Buy on Surf Air Mobility, Lowers Price Target to $2.5
Company: Joby Aviation
Quote: $JOBY
ST: N/A
We have never favored Joby, either in design or business model, despite its significant financial backing. Nevertheless, today the company stands in the public markets with revenues amounting to a mere $25,000—a figure that, were it any other SPAC, would likely provoke widespread outrage, especially after three years. The business model has always seemed unconvincing to us, and consequently, we have devoted less attention to it compared to others on this list. The competitive landscape appears too crowded for Joby to carve out a victorious path, making it challenging for us to assign a meaningful valuation to this name. Moreover, the substantial short interest within its float further complicates the picture.
Description: Joby Aviation, Inc., a vertically integrated air mobility company, engages in building an electric vertical takeoff and landing aircraft optimized to deliver air transportation as a service. The company intends to build an aerial ridesharing service, as well as developing an application-based platform that will enable consumers to book rides. Joby Aviation, Inc. was founded in 2009 and is headquartered in Santa Cruz, California.
Short Interest:
Short Percent of Float 20.55 %
Short % Increase / Decrease -2 %
The company commenced flight testing of full-scale prototypes in 2017 and has since completed over 1,000 test flights. Remarkably, its eVTOL achieved a 155-mile flight on a single charge in 77 minutes—the longest and farthest flight by an eVTOL aircraft to date.
Joby’s eVTOL is a six-rotor vehicle designed to accommodate one pilot and up to four passengers. It boasts a maximum speed of 200 mph, notably faster than the average civilian helicopter’s top speed of 160 mph. The aircraft can cover a range of 150 miles on a single charge, offering a considerable advantage over traditional helicopters, which typically average speeds around 120 mph, with the fastest civilian helicopters reaching up to 190 mph.
The primary use case, as proposed by Joby, is airport pickup and drop-off in densely populated cities. For instance, a trip from a downtown helipad in Los Angeles to Los Angeles International Airport (LAX) would take just 8 minutes by flying taxi, compared to over 30 minutes by a standard taxi.
Additionally, Joby’s flying taxi operates at extremely low noise levels, making it particularly suitable for urban pickups and drop-offs.
Navigating certification, testing, and regulations stands as the primary challenge for the company as it eyes commercial operations by 2024. Securing three crucial FAA approvals is pivotal for the company’s commercial aspirations:
Part 135 Certificate
Type Certificate
Production Certificate
Progress has been promising thus far, with the company attaining a U.S. Air Force Airworthiness and FAA Special Airworthiness Certificate for its second production vehicle. In a noteworthy milestone, Joby became the first eVTOL developer to secure a G-1 (stage 4) certificate with the FAA back in 2020.
Additionally, Joby obtained the Part 135 certificate well ahead of schedule, enabling a focused approach on aircraft testing and readiness for the slated 2024 commercial debut. This early achievement signifies positive momentum. The next critical steps involve acquiring the type and production certificates, essential milestones that will inch Joby closer to revenue generation.
Based on the Advanced Air Mobility Reality Index, Joby holds a 75-100% probability of entering commercial operations by 2024.
JP Morgan Upgrades Joby Aviation to Neutral, Maintains $5 Price Target
Cantor Fitzgerald Reiterates Overweight on Joby Aviation, Maintains $10 Price Target
Company: EHang Holdings
Quote: $EH
ST: $18- $24 (our previous targets from 2021).
For longstanding members, the Ehang trade during the pandemic likely remains a vivid memory—a meteoric rise akin to a rocket ship. It was a period where the market rewarded risk-taking, especially in ventures with futuristic prospects, as seen with EH at that time. However, since then, the shares have stabilized, and our attention to it has waned due to the inherent challenges in “trusting and verifying” data originating from China.
Ehang was then primarily viewed as an amusement vehicle, akin to a roller coaster, given its lack of clearance for commercial use. Reviewing the company’s recent investor letters, it appears that Ehang continues to iterate on the same narrative three years later, emphasizing more tests and debuts. However, from a safety standpoint, personally, I wouldn’t consider boarding an Ehang aircraft, nor would I recommend it to friends or family due to safety concerns. Of course, opinions may vary.
For us, Ehang is more of a trade opportunity if timed correctly. However, given the risks associated with its propositions and its geographical origin, a cautious approach with a grain of salt seems prudent.
Description: EHang Holdings Limited operates as an autonomous aerial vehicle (AAV) technology platform company in the People’s Republic of China, East Asia, West Asia, Europe, and internationally. It designs, develops, manufactures, sells, and operates AAVs, as well as supporting systems and infrastructure for various industries and applications, including passenger transportation, logistics, smart city management, and aerial media solutions. It has a strategic partnership with Greater Bay Technology to research and develop ultra-fast charging/extreme fast charging battery solutions for its electric vertical takeoff and landing aircraft. EHang Holdings Limited was incorporated in 2014 and is headquartered in Guangzhou, the People’s Republic of China.
Short Interest:
Short Percent of Float %
Short % Increase / Decrease 0 %
Morgan Stanley Initiates Coverage On EHang Holdings with Overweight Rating, Announces Price Target of $27.5
